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Non-stop Love: A Study of Entry Barriers in the Airline Industry Using Policy Changes at Dallas Love Field

Pukar Kc ()
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Pukar Kc: Northeastern University

Eastern Economic Journal, 2020, vol. 46, issue 3, No 1, 379-413

Abstract: Abstract Exogenous changes in entry barrier conditions faced by firms allow for an analysis of their impact on competition and market structure. This empirical study finds that the policy changes at Love Field airport arising from the repeal of the Wright Amendment in October 2014 led to reduction in airfares on routes between Dallas and cities beyond the neighboring states of Texas, but increase in airfares on routes between Dallas and destinations in Texas and its surrounding states (collectively called the Wright Perimeter). The fare decrease can be attributed to airlines (primarily Southwest) entering non-stop markets from Love Field, whereas the fare increases in the short-haul within Wright Perimeter markets indicates the impact of binding gate constraints. A capacity-constrained entry model is used to explain the opposite effects in different markets.

Keywords: Competition; Regulation; Industrial organization (search for similar items in EconPapers)
JEL-codes: D04 K21 L9 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1057/s41302-019-00165-0

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