Equilibrium Airfares, Frequencies and Airport Taxes in a Multiple Airport Region: An Application of the Nested Logit Demand Model

Eric Pels, Peter Nijkamp and Piet Rietveld
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Eric Pels: Vrije Universiteit Amsterdam

No 98-073/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: In this paper a model, based on the nested multinomial logit model, is used to analyze airport competition and airline competition in a multiple airport region. It is shown that if the frequency elasticity of demand is smaller than 1, airfare-frequency and airport tax equilibria exist and are unique.Symmetric equilibria are derived analytically and their properties are discussed. Asymmetric equilibria are obtained numerically, and their properties are discussed.

Date: 1998-07-09
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