A re-examination of incumbents’ response to the threat of entry: Evidence from the airline industry
Philip Gayle () and
Economics of Transportation, 2013, vol. 2, issue 4, 119-130
Much of the literature on the airline industry identifies a potential entrant to a market based on whether the relevant carrier has presence in at least one of the endpoint airports of the market without actually operating between the endpoints. Furthermore, a potential entrant is often defined as a credible “entry threat” to market incumbents once the potential entrant establishes presence at the second endpoint airport of the market. This paper provides evidence that even when a potential entrant has presence at both endpoint airports of a market, incumbents may not respond to this as an effective “entry threat”. Specifically, we find that (1) incumbents lower price by more when the potential entrant has a hub at one or both market endpoints; and (2) incumbents increase rather than lower their price if they have an alliance partnership with the “potential entrant”.
Keywords: Empirical entry model; Airline competition (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: A Re-examination of Incumbents’ Response to the Threat of Entry: Evidence from the Airline Industry (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:ecotra:v:2:y:2013:i:4:p:119-130
Access Statistics for this article
Economics of Transportation is currently edited by Mogens Fosgerau and Erik Verhoef
More articles in Economics of Transportation from Elsevier
Bibliographic data for series maintained by Haili He ().