EconPapers    
Economics at your fingertips  
 

How do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines

Austan Goolsbee () and Chad Syverson

No 11072, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine how incumbents respond to the threat of entry by competitors (as distinct from how they respond to actual entry). We look specifically at passenger airlines, using the evolution of Southwest Airlines' route network to identify particular routes where the probability of future entry rises abruptly. We find incumbents cut fares significantly when threatened by Southwest's entry. Over half of Southwest's total impact on incumbent fares occurs before Southwest starts flying. These cuts are only on threatened routes, not those out of non-Southwest competing airports. The evidence on whether incumbents are seeking to deter or accommodate entry is mixed.

JEL-codes: L1 L9 (search for similar items in EconPapers)
Date: 2005-01
New Economics Papers: this item is included in nep-com
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15) Track citations by RSS feed

Published as Austan Goolsbee & Chad Syverson, 2008. "How do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines," The Quarterly Journal of Economics, MIT Press, vol. 123(4), pages 1611-1633, November.

Downloads: (external link)
http://www.nber.org/papers/w11072.pdf (application/pdf)

Related works:
Journal Article: How Do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines (2008) Downloads
Working Paper: How Do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines (2004) 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: https://EconPapers.repec.org/RePEc:nbr:nberwo:11072

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11072

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2020-01-23
Handle: RePEc:nbr:nberwo:11072