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Appendix to “Cost pass-through in Commercial Aviation: Theory and Evidence” – Theoretical Derivations

Philip Gayle () and Ying Lin

MPRA Paper from University Library of Munich, Germany

Abstract: This appendix serves as a supplement to “Cost Pass-through in Commercial Aviation: Theory and Evidence.” In this appendix we present the computational details of the theoretical model as well as the model predictions described in the text of the above-mentioned paper. Using a model of air travel demand and supply for an origin-destination market, we derive the closed-form expression for Nash equilibrium airfares, and use the closed-form expression to perform a series of comparative statics exercises. In particular, crucial expressions for obtaining predictions in Table 1 and Table 2 in the paper (Gayle and Lin, 2020) are provided.

Keywords: Crude oil-Airfare Cost Pass-through; Jet fuel hedging (search for similar items in EconPapers)
JEL-codes: L13 L93 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ore and nep-tre
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