Ownership and pricing response to entry

Zexuan Liu

Economics Letters, 2020, vol. 186, issue C

Abstract: I explore state-owned and privately-owned incumbents’ differential pricing responses to low cost carrier (LCC) entry in the international airline market. I find that privately-owned incumbents substantively cut prices in response to LCC entry, whereas state-owned incumbents do not. The differential responses of state-owned vs. privately-owned is more considerable on the slot-restricted routes, where incumbents have monopolistic power. In addition, Chinese airlines and Gulf carriers who are aggressively expanding behave differently from other state-owned carriers.

Keywords: Firm ownership; Pricing response; Incumbent (search for similar items in EconPapers)
JEL-codes: L11 L93 R41 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:186:y:2020:i:c:s0165176519304276

DOI: 10.1016/j.econlet.2019.108843

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