Barriers to Entry in the Airline Industry: A Multidimensional Regression-Discontinuity Analysis of AIR-21

Connan Snider () and Jonathan W. Williams ()
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Connan Snider: UCLA
Jonathan W. Williams: University of North Carolina

The Review of Economics and Statistics, 2015, vol. 97, issue 5, 1002-1022

Abstract: We investigate the success of legislation aimed at increasing competition at highly concentrated U.S. airports, mainly by forcing these airports to increase the availability of scarce facilities. We use a multidimensional regression-discontinuity approach to exploit a sharp discontinuity in the law’s implementation and identify its effects. We find that fares decrease by 13.4% (20.2%) in markets with one (both) end point(s) covered. Approximately half of the decline is driven by the entry of low-cost carriers. We find little evidence that the fare declines were accompanied by a diminished quality of service, and passenger volumes increased, which suggests the legislation improved consumer welfare.

Keywords: Regression Discontinuity; Treatment Effect; Airline Industry; Barriers to Entry; Hub Premium; Airport Facilities (search for similar items in EconPapers)
JEL-codes: C14 L13 L50 L93 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (16)

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