Demand shifting across flights and airports in a spatial competition model

Diego Escobari and Sang-Yeob Lee ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the nature of day-to-day competition between flights using a unique panel data set on prices and inventories. We use instrumental variables methods and several spatial autoregressive models (SAR) to estimate price reaction functions. The primary source of product differentiation is departure time. After controlling for flight-specific characteristics and various sources of price dispersion, we find important evidence of demand shifting between competing flights. Most of the shift is being captured by flights scheduled to depart within a 3-hour window. We find no evidence of demand shifting between airports.

Keywords: Spatial Autoregressive Models; Competition; Demand Shifting; Airlines (search for similar items in EconPapers)
JEL-codes: C21 D4 L93 (search for similar items in EconPapers)
Date: 2012-04-17
New Economics Papers: this item is included in nep-com, nep-geo and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Demand shifting across flights and airports in a spatial competition model (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:38799

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