Does Multimarket Contact Facilitate Tacit Collusion? Inference on Conjectural Parameters in the Airline Industry
Federico Ciliberto () and
MPRA Paper from University Library of Munich, Germany
We nest conjectural parameters into a standard oligopoly model. The conjectural parameters are modeled as functions of multimarket contact. Using data from the US airline industry, we find: i) carriers with little multimarket contact do not cooperate in setting fares, while carriers serving many markets simultaneously sustain almost perfect coordination; ii) cross-price elasticities play a crucial role in determining the impact of multimarket contact on collusive behavior and equilibrium fares; iii) marginal changes in multimarket contact matter only at low or moderate levels of contact; iv) assuming that firms behave as Bertrand-Nash competitors leads to biased estimates of marginal costs.
Keywords: Multimarket Contact; Collusion; Differentiated Products; Airport Facilities; Airline Industry (search for similar items in EconPapers)
JEL-codes: L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/24888/1/MPRA_paper_24888.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/27506/1/MPRA_paper_27506.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/39329/1/MPRA_paper_39329.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/39515/1/MPRA_paper_39515.pdf revised version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:24888
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().