The remains of regulation: airlines' profits after liberalization

Pedro L. Marin

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper develops an empirical model of entry to analyze the effect of previous regulation on European airlines? post-liberalization profits. The author distinguishes between European flag carriers, which are hightly regulated at the beginning of the eighties, and independent airlines. It is found that the latter enjoy sunk cost advantages but get lower variable profits than the former. This means that possible efficiency disadvantages suffered by the flag carriers are more than offset by their higher perceived quality, leading to a situation in which they are less likely to enter a route, but also less likely to exit.

Keywords: Airlines; profits; entry; deregulation (search for similar items in EconPapers)
JEL-codes: L19 L59 L93 (search for similar items in EconPapers)
Pages: 37 pages
Date: 1995-12
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:6774

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