Economics at your fingertips  

Exchanges of Cost Information in the Airline Industry

Olivier Armantier and Oliver Richard

RAND Journal of Economics, 2003, vol. 34, issue 3, 461-77

Abstract: We empirically analyze exchanges of cost information in a multimarket oligopoly model for the airline industry with entry and incomplete information on marginal costs. We develop an algorithm to solve the Nash equilibrium numerically. We estimate the structural model of supply decisions using data on the American Airlines and United Airlines duopoly at Chicago O'Hare airport. Our results provide probabilities of entry, expected quantities, prices, and profits in each market. Given the estimated parameters, we simulate competition under a hypothetical agreement to exchange cost information. We find that such exchanges would benefit airlines while only moderately costing consumers. Copyright 2003 by the RAND Corporation.

Date: 2003
References: Add references at CitEc
Citations View citations in EconPapers (6) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Exchanges of Cost Information in the Airline Industry (2000) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Series data maintained by ().

Page updated 2017-09-29
Handle: RePEc:rje:randje:v:34:y:2003:i:3:p:461-77