multiple equilibria and deterrence in airline markets we use data from the us airline industry to estimate a model of entry deterrence we model the interaction among airlines as a repeated static game where we allow for a very general form of heterogeneity we consider a menu of three alternative games that describe the strategic interaction among airlines simultaneous and sequential move games and a sequential move game with deterrence investments following bernheim 1984 deterrence investments include all investment that raises barriers to entry and for which the incumbent must incur some investment costs we show that the profits that incumbents can make in the sequential game both with and without deterrence investments are larger than those that they can make if the game is played simultaneously thus we find that on average it is profitable for all firms to deter new entrants with the exception of united airlines remarkably united airlines was under bankruptcy protection during the period of analysis suggesting that its deterrence investments were not credible overall we find that the data is explained better by a model where firms make deterrence investments thus we cannot reject the hypothesis that incumbents deter entrants in the airline industry

mergers and business model assimilation evidence from low cost airline takeovers this paper examines mergers that lead to an almost immediate replacement of the target firm s business model in favour of that of the acquiring firm we examine the post merger behaviour of the two leading european dedicated low cost airlines easyjet and ryanair each acquiring another low cost airline respectively go fly and buzz we find that both takeovers had an immediate and sustained impact on both the pricing structures and the extent of inter temporal price discrimination used on the acquired routes with early booking fares noticeably reduced and only very late booking fares increased overall the analysis points to a pro competitive effect of both takeovers as a consequence of the introduction of the acquiring firms business models and associated yield management pricing systems

uncovering spatial productivity centers using asymmetric bidirectional spillovers abstract the principal contribution of this paper is to present the first method to sift through a large number of firms in an industry to uncover which firms act as large spatial total factor productivity tfp growth centers we define a large spatial tfp growth center as a firm that is a large net generator of spatial tfp growth spillovers i e it is a source of large tfp growth spill outs to other firms vis a vis the size of the tfp growth spill ins that permeate to the firm from other firms we use this definition because other things being equal firms would want to locate near a firm that is a net generator of tfp growth spillovers in the process of presenting the above method we make three further contributions two of which are methodological and the other relates to our application first rather than follow the literature on spatial frontier modeling by considering spatial interaction between firms in a single network we introduce a more sophisticated model that is able to account for spatial interaction in multiple networks second we obtain bidirectional spatial tfp growth decompositions by complementing a unidirectional decomposition in the literature where the spillover components are spill ins to a firm with a decomposition that includes spill out components third from a spatial revenue frontier for u s banks 1998 2015 we find a number of cases where banks that represent large spatial tfp growth centers have branches that cluster together while in several states we find no such clusters

economies of traffic density in the deregulated airline industry this article estimates a structural model of competition among hub and spoke airlines in order to measure the strength of economies of traffic density on individual route segments we find that economies of density were strong during the sample period fourth quarter 1985 stronger than previous estimates by douglas caves laurits christensen and michael tretheway derived from traditional cost function methods we also find that the airlines competitive behavior was far from collusive in the markets under study markets requiring a connection at a hub airport our structural model also provides plausible estimates of demand elasticities we use our estimates to provide a cost based rationale for the major changes in the structure of the industry following deregulation for example the increase in airport and industry wide concentration and the increase in competition at the city pair market level and to simulate the effects of a merger of airlines that share a hub

are airports engines of economic development a dynamic panel data approach this paper applies the dynamic panel data generalized method of moments estimator to the data on commercial passenger air traffic at all primary airports in the united states to evaluate the impact of traffic volume and number of destinations served with non stop flights on the key indicators of regional economic development we find that number of destinations served with non stop flights has a much clearer and more robust impact on level of employment number of business establishments and average wage in the region passenger traffic volume affects employment and average wage but not number of establishments at the sample median connecting a metropolitan statistical area with an extra destination keeping everything else constant creates 98 jobs and facilitates the opening of four new business establishments that employ people the corresponding numbers for the sample mean are 223 jobs and 15 businesses the impact of air travel on regional economic development is influenced by competition on the

trucks without bailouts equilibrium product characteristics for commercial vehicles the entry and exit of products rather than firms serve as the main equilibrating force in many markets so accurately predicting changes from a merger or bankruptcy should incorporate this behavior this paper estimates a structural model of the us commercial vehicle market and demonstrates the importance of allowing for endogenous product offerings in the context of the 85 billion automotive industry bailout in 2009 under alternate policies that facilitate an acquisition or liquidation of gm and chrysler product entry and exit moderate markup increases and output decreases by up to three quarters

airline market power and intertemporal price dispersion this paper analyzes the empirical relationship between market structure and price dispersion in the airline markets connecting the u k and the republic of ireland price dispersion is measured by the gini coefficient calculated using fares posted on the internet at specific days before takeoff we control for passengers heterogeneity in their purpose of travel as well as for such peak periods as christmas and easter our finding of a negative correlation between competition and price dispersion suggests that competition is likely to hinder the airlines ability to price discriminate although this effect appears to be lessened in peak periods

does competition reduce price dispersion new evidence from the airline industry we analyze the effects of competition on price dispersion in the airline industry using panel data from 1993 q1 through 2006 q3 competition has a negative effect on price dispersion in line with the textbook treatment of price discrimination this effect is pronounced for routes with consumers characterized by relatively heterogeneous elasticities of demand on routes with a homogeneous customer base the effects of competition on price dispersion are smaller our results contrast with those of borenstein and rose who found that price dispersion increases with competition we reconcile the different results by showing that the cross sectional estimator suffers from omitted variable bias

did the airline tariff publishing case reduce collusion abstractin december 1992 the u s department of justice filed suit against eight major domestic airlines and the airline tariff publishing atp company in order to reduce opportunities for collusion in the industry the lawsuit ended with consent decrees limiting the ability of airlines to communicate surreptitiously through the shared fare database this paper measures the effects of the litigation and its settlement on industry performance comparing changes in outcomes between market segments that were more and less likely to be affected by the atp case prices fell in response to the investigation but increased following the settlement while the number of tickets sold in affected markets declined the importance of multimarket contact also declined and then recovered the atp case had at best a temporary effect on airline collusion

localized market power in the u s airline industry this paper tests whether the observed dominance of most city pair markets and airports in the u s domestic airline industry by single carriers confers any pricing power on the dominan t firms the results of fixed effects estimation indicate that airport dominance by a carrier does confer upon it substantial pricing power whereas dominance at the route level seems to confer no such pricing power additionally the authors find a positive yet small correlation between both route concentration and price and airport concentration and price the quantitative importance of airport dominance reveals that the most promising direction for public polic y aimed at improving the industry s performance is to ensure equal acc ess to sunk airport facilities copyright 1993 by mit press

spatial multiproduct pricing empirical evidence on intra european duopoly airline markets this paper estimates a model of spatial multiproduct duopoly pricing when the location patterns differ across markets the theoretical model suggests that the neighbouring configuration yields less competitive nash prices than the interlaced configuration i apply this model to data for intra european duopoly airline markets the empirical results support the theoretical model since i find that fares are higher on intra european markets that exhibit neighbouring configurations in the time domain this result suggests that price competition is reduced when each airline operates on a specific segment of the timetable e g the first 12 hours of the day clearly this result has several implications for policy makers and or airport authorities in charge of awarding slots

has ryanair s pricing strategy changed over time an empirical analysis of its 2006 2007 flights abstract this paper analyzes the question of whether ryanair s pricing strategies have changed over time we create a panel dataset of fares for all of ryanair s european flights over a two year period from 1 january 2006 to 31 december 2007 we calculate the average fare over a 90 day period prior to departure and the intensity of dynamic pricing for each flight in the panel in particular analysing the changes in these variables observed between pairs of equivalent flights our results show that overall both average fares and the intensity of dynamic pricing decreased in 2007 more than one third of flights saw a price reduction of more than 10 now that it has become the dominant low cost carrier in europe ryanair appears to be softening its dynamic pricing activities on existing routes typically employed to stimulate additional touristic demand thus booking in advance becomes relatively more expensive

the evolution of u s airline competition studies by academic economists were a significant force in the movement towards deregulation of the domestic airline industry in the early 1970s levine 1965 jordan 1970 keeler 1972 douglas and miller 1974 during the critical 1977 78 period in which deregulation was imposed first de facto by the civil aeronautics board cab and then de jure by congress the chairman and vice chairman of the cab were economists for the 14 years since deregulation economists have continued intensive study of the industry in part because of the unusual availability of reliable firm and transaction level data and in part because of the rare opportunity to observe an industry as it evolves from strict economic regulation to fairly unimpeded competition and strategic behavior the simplest prediction of economists about airline deregulation and one of the few on which nearly all economists agreed was that deregulation would improve consumer welfare in comparison to continued price and entry regulation fourteen years later nearly all economists still agree on this though the degree of enthusiasm for the deregulation outcome varies considerably there was substantial disagreement among economists about the market structure that would result because studies of scale economies in the airline industry had concluded that none existed beyond the scale of the smaller major airlines of the 1970s caves 1962 eads et al 1969 many economists argued that deregulation would result in more than the 11 major airlines that existed at the time of deregulation others predicted that only a few or possibly only one airline would survive at a large scale two noted university of chicago economists sam peltzman and lester telser made a bet in 1979 on whether

air travel choices in multi airport markets abstract we study how air travel consumers departing from a multi airport region trade off across airport and airline supply characteristics we empirically investigate this trade off by estimating a weighted conditional logit model of airport airline choice using survey data on travels departing from one of three san francisco bay area airports and arriving at one of four airports in greater los angeles in october 1995 non price characteristics like airport access time airport delay flight frequency the availability of particular airport airline combinations and early arrival times are found to strongly affect choice probabilities we calculate marginal effects and counterfactual scenarios to compare the values of these characteristics among each other and across traveler type in order to examine the robustness of the conditional logit model we estimate a mixed logit model and find that the results are similar we attribute the similarity to our strictly defined travel market and to our distinction between leisure and business travelers thus controlling for two important sources of consumer heterogeneity we consider the implications of our empirical findings on vertical integration between airlines and airports on the effectiveness of airport dominance and on the competitive effect of entry by low cost carriers

a bertrand model of pricing and entry abstract we analyze an oligopolistic pricing and entry model in which there is a sunk cost of entry and in which firms outputs are homogeneous firms pure strategies consist of a binary entry decision and conditional on entry a uniform or non linear price schedule there does not exist a pure strategy nash equilibrium in this model so we analyze the symmetric mixed strategy equilibrium the main result is that if there exists a positive sunk cost of entry then an increase in the number of potential competitors puts more probability weight on higher prices this result is counter to the usual intuition that underlies current antitrust policy

barriers to entry in the airline industry a multidimensional regression discontinuity analysis of air 21 abstract we investigate the success of legislation aimed at increasing competition at highly concentrated u s airports mainly by forcing these airports to increase the availability of scarce facilities we use a multidimensional regression discontinuity approach to exploit a sharp discontinuity in the law s implementation and identify its effects we find that fares decrease by 13 4 20 2 in markets with one both end point s covered approximately half of the decline is driven by the entry of low cost carriers we find little evidence that the fare declines were accompanied by a diminished quality of service and passenger volumes increased which suggests the legislation improved consumer welfare

airline pricing behavior under limited inter modal competition this paper empirically analyzes airline pricing for short haul flights in contexts with no credible threat of inter modal competition to this end we explore the southern italian market since it is less accessible by other transport modes and thus fares are the direct outcome of air related competition we show in fact that market power matters depending on the level of intra modal competition and that airlines apply differentiated mark ups besides consistent with the implementation of inter temporal price discrimination ipd we find a non monotonic inter temporal profile of fares with a turning point included in the interval of the 43rd to 45th days before departure finally we provide evidence that in more competitive markets airlines are more likely to engage in ipd jel l11 l13 l93

community based development and poverty alleviation an evaluation of china s poor village investment program we conduct the first systematic evaluation of the world s largest community based development program china s flagship poverty alleviation program began in 2001 which finances public investments in designated poor villages based on participatory village planning we use matching methods and a panel household and village data set with national coverage to compare changes from 2001 to 2004 in designated poor villages that began plan investments and in designated poor villages that had yet to begin plan investments we find that the program significantly increased both government and village financed investments while the program did not increase the income or consumption of poorer households it did increase the income and consumption of richer households by 6 1 to 9 2 we also find suggestive evidence that governance matters in the distribution of program benefits relative gains were greater for richer households in villages with more educated leaders and higher quality village committees delivered greater benefits to both richer and poorer households

buen vivir living well in ecuador community and environmental satisfaction without household material prosperity article i nfo this paper provides a quantitative approach to assessing whether the subjective wellbeing swb of ecuadorian people is dependent on income and employment or on more distinctive features relating to buen vivirethos the latter are reflected in the indigenous buen vivir ideology based mainly on relations with the community the environment and food sovereignty the empirical analysis shows that both buen vivir features and factors such as income and unemployment status are significant in the models explaining swb accordingly economic policies should take into account the buen vivir ethos that seems to be important for the swb of the ecuadorian people this supports the conservationist political position which focuses on protecting the environ ment and people s traditional livelihoods rather than the extractive view which regards people s welfare as merely dependent on income 2014 published by elsevier b v 1 in this paper we use the expressions buen vivir ethos buen vivir philosophy buen vivir ideologyorbuen vivirfeatures to refer to this original buen vivir that has grown from indigenous traditions harmonious coexistence with nature power sharing relationships and collective rights sense of community and local and primary production of food in a community s own territory for self consumption a compilation of texts on buen vivirphi losophy in the indigenous tradition can be found in hidalgo capitan et al 2014

price discrimination in the context of vertical differentiation an application to canadian wheat exports this study examines the ability of the canadian wheat board cwb to price discriminate in bread wheat exports this study models wheat as a vertically differentiated intermediate good and modifies the model of vertical differentiation by mussa and rosen to the realities of wheat import demand the conceptual model isolates the bases of price discrimination and demonstrates that the cwb s ability to exploit cost differences in pricing depends on the extent of the differentiation between canadian and u s wheat this model is implemented using monthly confidential price data provided by the cwb for exports to japan the united kingdom and two markets aggregating remaining exports through canada s west and east coasts for 1982 1994 the data indicate that the cwb charges different prices to different countries for wheat of the same grade and protein content results from the model indicate that the price difference between any two markets is not completely explained by elements of perfect competition however the evidence is mixed regarding the ability of the cwb to utilize all the instruments available to price discriminate thus the cwb s pricing strategy may be more complex and dynamic than the prescription for static producer surplus maximization derived in this study

structural estimation of sequential games of complete information in models of strategic interaction there may be important order of entry effects if one player can credibly commit to an action e g entry before other players if one esti mates a simultaneous move model then the move order effects will be confounded with the payoffs this paper considers nonparametric identification and simulation based estimation of sequential games of complete information relative to simultaneous move games these models avoid the problem of multiple equilibria and require fewer payoff normalizations we apply the estimator in several monte carlo experiments and to study entry order effects using data from the airline industry

equilibria in networks we study a model in which two carriers choose networks to connect cities and compete for customers we show that if carriers compete aggressively e g bertrand like behavior one carrier operating a single hub spoke network is an equilibrium outcome competing hub spoke networks are not an equilibrium outcome although duopoly equilibria in nonhub networks can exist if carriers do not compete aggressively an equilibrium with competing hub spoke networks exists as long as the number of cities is not too small we provide conditions under which all equilibria consist of hub spoke networks

the impact of industry consolidation on government procurement evidence from department of defense contracting abstract we study the relationship between market structure and public procurement outcomes in particular we ask whether and to what extent consolidation driven increases in industry concentration affect the way in which the government procures its goods and services we focus on the defense industry by far the largest contributor to federal procurement spending in the u s this industry experienced a sharp increase in the level of concentration during the 1990s driven by a series of large mergers between defense contractors using detailed microdata on department of defense dod contract awards we estimate the causal effect of industry concentration on a series of procurement outcomes leveraging the differential impact of these mergers across product markets we find that market concentration caused the procurement process to become less competitive with an increase in the share of spending awarded without competition or via single bid solicitations increased concentration also induced a shift from the use of fixed price contracts towards cost plus contracts however we find no evidence that consolidation led to a significant increase in acquisition costs we infer that the government s buyer power especially relevant in this context given the government is often the only purchaser constrained firms from exercising any additional market power gained by consolidation

domestic airline alliances and consumer welfare this article investigates the consumer welfare consequences of the recent code share agreement between continental airlines and northwest airlines we develop a discrete choice model based on individual flight characteristics this structural model recognizes that consumers i may have heterogeneous preferences for flight attributes and ii may face different prices for the same flight the empirical methodology also deals with the measurement error problem stemming from the absence of consumer level data on prices the estimation results suggest that whereas the code share agreement did not impact consumers significantly on average it increased the average surplus of connecting passengers but decreased the average surplus of nonstop passengers interestingly the magnitude of our welfare results may be attributed in large part to changes in product characteristics other than prices

price discrimination in oligopoly evidence from regional newspapers recent theoretical work has shown that the incentive to target rival firms customers with low prices can increase price discrimination and that the strength of the incentive depends on a firm s market position using data on swedish newspaper subscriptions we find strong support for these predictions newspapers with a local competitor sell a larger part of their circulation at a discount than monopoly newspapers moreover in competitive markets the use of discounts is inversely related to the newspaper s market share we find no evidence that price discrimination based on observable and exogenous characteristics is influenced by the market structure

estimation of a model of entry in the airline industry this paper considers the effect of an airline s scale of operation at an airport on the profitability of routes flown out of that airport the empirical methodology uses the entry decisions of airlines as indicators of underlying profitability the results extend the empirical literature on airport presence by providing a new set of estimates of the determinants of city pair profitability these estimates imply that city pair profits increase in airport presence and decrease rapidly in the number of entering firms the literature on empirical models of oligopoly entry is also extended via a focus on the role of differences between firms

tourism and economic development a survey this article surveys the literature on tourism and economic development identifying the contribution that tourism can make to development including foreign currency income and employment and the costs that it entails single equation and system of equations models for estimating tourism demand are provided indicating developing countries potential to benefit from increasing expenditure on tourism but their susceptibility to deterioration in price competitiveness the main sectors of tourism supply transportation tour operators travel agents and accommodation are examined and the importance of cross country integration between firms is highlighted the article argues that many of the problems associated with the use of environmental resources for tourism stem from market failure and it considers methods for increasing sustainably the returns from them

pricing and performance in monopoly airline markets since the airline deregulation act of 1978 ada much has been learned about the performance characteristics of airline markets functioning free of governmental control contrary to the initial expectations of many airline markets do not appear to conform well to the contestable markets model numerous empirical studies of the industry have concluded that performance depends on the level of actual competition a result incompatible with perfect contestability 2 in a perfectly contestable

the competitive impact of air crashes stock market evidence abstract we examine stock market reactions to commercial air crashes to test the hypothesis that consumers respond by switching to rival airlines and or flying less we focus on the stock price reactions of airlines not involved in the crash if switching occurs noncrash airlines should benefit to the extent that they are direct competitors of the crash airline we develop a measure of market overlap and regress individual non crash airline abnormal returns on this measure allowing the constant term to capture any negative spillovers the evidence supports both a switching effect and a spillover

hubs and high fares dominance and market power in the u s airline industry this article estimates the importance of route and airport dominance in determining the degree of market power exercised by an airline the results indicate that an airline s share of passengers on a route and at the endpoint airports significantly influences its ability to mark up price above cost the high markups of a dominant airline however do not create much of an umbrella effect from which carriers with smaller operations in the same markets can benefit the article suggests a number of possible explanations for this asymmetry

multimarket contact economies of scope and firm performance we integrate the efficiency and competitive effects of product market scope choice into a comprehensive model of economic performance and empirically test the model in the context of the u s airli

nonlinear pricing strategies and competitive conditions in the airline industry i introduction many industries use nonlinear pricing based on product attributes one industry where this practice is long recognized is domestic airlines while price dispersion in the industry has been widely studied data limitations have prevented analysis investigating the impact of competitive conditions on price dispersion linked to nonlinear pricing as opposed to variation in costs this paper uses a novel data set that allows us to investigate how nonlinear pricing strategies vary with market structure we construct a ticket menu using standard categories of tickets including first class tickets business class tickets fully refundable tickets nonrefundable tickets and nonrefundable restricted tickets these categories exhibit substantially different prices and are available across all types of routes we investigate both how market concentration and the competitive pressures generated by southwest and other low cost carriers impact the relative fares within the ticket menu using traditional measures of concentration including both herfindahl hirschman index hhi and discrete measures used in other studies of airlines competitive duopoly and monopoly we observe only a modest impact of concentration on relative fares the discrete measures appear to be more informative indicating that concentration primarily reduces the relative fares for high end first class tickets on monopoly routes we identify a puzzle regarding the pricing of high end fares under monopoly the evidence does not support a more general relationship between concentration and other fares we find considerably stronger evidence regarding the impact of southwest on the fare structure while previous studies show that southwest s presence reduces mean fares our results provide a much richer picture the results show that southwest s presence reduces low end fares but actual and potential competition from southwest also generally leads to a substantial compression of the entire fare structure competition from other low cost carriers also affects the fare structure but does not lead to a compression of fares our analysis ties into several literatures our work is closely related to the theoretical work on nonlinear pricing and imperfect competition see e g rochet and stole 2002 stole 1995 1 generically however there is no natural empirical implementation of these models for testing more specifically in these models consumers differ in two dimensions brand loyalty and their marginal preference for quality the results of these papers show that the relationship between competition and high versus low prices turns on the correlation between consumers preferences for quality and their brand loyalty unfortunately these models generally predict monotonicity so that prices exhibit either a wider or narrower spread related to competition busse and rysman 2002 our results in contrast show that higher prices are reduced on highly concentrated routes but that intermediate prices are at most modestly affected the results for actual and potential competition from southwest generally support the predictions of rochet and stole 2002 that increased competition will lead to fare compression our study is also related to the empirical work on competition and price dispersion in airline markets there is an extensive body of work regarding the relationship between market concentration and airline price dispersion the empirical evidence on this matter is mixed in a seminal paper borenstein and rose 1994 examine concentration and price dispersion using cross sectional variation in market concentration and dispersion to identify the relationship between the two they show that airlines offer highly dispersed prices the expected absolute difference in fares between two randomly chosen passengers on the same airline and route is 36 of the average price the authors also find that price dispersion decreases with market concentration

evidence of directional price discrimination in the u s airline industry abstract this paper explores possible determinants that may affect an airline s decision to charge passengers different roundtrip fares depending on trip origin a case of directional price discrimination such fare differences cannot be the result of differences in cost as the cost of flying a roundtrip passenger does not significantly differ depending on direction it is argued that directional fare differences result from airlines recognizing that passenger price elasticities differ between route endpoints a price discriminating airline will then charge a higher roundtrip fare at the endpoint where the passenger price elasticity of demand is comparatively lower evidence is found suggesting that airlines do use differences in income to price discriminate when setting roundtrip fares fares are found to be 0 18 0 43 higher on average for each 1000 difference in average per capita income between origin and destination metro areas this finding is sensible assuming that higher incomes reduce the price elasticity of demand for air travel with richer passengers being less sensitive to the cost of travel

market structure competition and pricing in united states international telephone service markets several national governments argue international telephone prices are high because of asymmetric competition and inefficiencies in the accounting arrangements that govern the telecommunications services trade this paper develops a model of u s international telephone pricing that allows for the accounting rate system and contains market structure variables for both the u s and foreign ends of bilateral markets model estimation is on 39 bilateral telephone markets from 1991 through 1994 parameter estimates reveal that settlement rates market concentration competition at either end of the bilateral market and ownership are significant determinants of prices these findings support initiatives promoting accounting rate reductions and increased competition

capacity and product market competition measuring market power in a puppy dog industry abstract in this paper we specify and estimate a structural model which accounts for competition in two variables capacity and prices the model has a two stage setup in the first stage firms make capacity decisions followed by a product differentiated price setting game in the second stage since costs are endogenized through the first stage this has important implications for the measurement of market power in the product market in particular simpler one stage specifications would result in a bias in the measurement of market power which can be linked to the taxonomy for two stage games given in fudenberg and tirole 1984 fudenberg d tirole j 1984 the fat cat effect the puppy dog ploy and the lean and hungry look american economic review paper and proceedings 74 361 366 we then estimate this model demand cost short and long run and conduct for the european airline industry using data for the period of 1976 1990 we perform a number of specification tests and reject a simple one stage specification in favor of our two stage set up in particular we find that some degree of market power in the product market exists however market conduct in the two stage set up is significantly less collusive than in the more widely employed one stage specification which is consistent with the direction of bias in puppy dog games this illustrates that collusiveness of firms market conduct in the product market is significantly overestimated whenever capacity competition is not accounted for

price dispersion and differentiation in online travel an empirical investigation previous research has examined whether price dispersion exists in theoretically highly efficient internet markets however much of the previous work has been focused on industries with low cost and undifferentiated products in this paper we examine the presence of price dispersion and product differentiation using data on the airline ticket offerings of online travel agents otas we find that different otas offer tickets with substantially different prices and characteristics when given the same customer request some of this variation appears to be due to product differentiation different otas specialize by systematically offering different trade offs between ticket price and ticket quality minimizing the number of connections matching requested departure and return time however even after accounting for differences in ticket quality ticket prices vary by as much as 18 across otas in addition otas return tickets that are strictly inferior to the ticket offered by another ota for the same request between 2 2 and 28 of the time overall this suggests the presence of both price dispersion and product differentiation in the online travel market

network effects congestion externalities and air traffic delays or why not all delays are evil we examine two factors that explain air traffic congestion network benefits due to hubbing and congestion externalities while both factors impact congestion we find that the hubbing effect dominates empirically hub carriers incur most of the additional travel time from hubbing primarily because they cluster their flights in short time spans to provide passengers as many potential connections as possible with a minimum of waiting time non hub flights at the same hub airports operate with minimal additional travel time these results suggest that an optimal congestion tax might have a relatively small impact on flight patterns at hub airports jel l2 l5 l9 d6

predatory reputation in us airline markets abstract despite its long history in antitrust policy predation remains a poorly understood phenomenon the main difficulty is in empirically identifying predatory intent i propose a method for measuring the effect of reputation whose significance would enable us to infer predatory intents maximum likelihood estimation using simulated annealing algorithm is conducted with a sample of us airline markets the results provide some support for the presence of entrants learning and reputation effect as an application i discuss how the outcomes of my empirical model could help analyze such antitrust cases as the american airlines case