This paper studies airlines＇ competitive behavior in the U.S. airline in- dustry, focusing on 2014 data. I use a structural model to estimate demand and test several supply models, including noncooperative competitio...This paper studies airlines＇ competitive behavior in the U.S. airline in- dustry, focusing on 2014 data. I use a structural model to estimate demand and test several supply models, including noncooperative competition, perfect collusion, and tacit coordination. There are three different types of tacit coordination, formed by multimarket contact, common ownership, and codeshare agreement, respectively. I find that the model that fits the data best is a tacit coordination model with coalitions between airlines with at least 30% of their markets overlapped and using price rather than quantity as the strategic variable. I further analyze the consumer welfare loss, each carrier＇s profit gains, and changes in market variables due to the tacit coordination.展开更多
文摘This paper studies airlines＇ competitive behavior in the U.S. airline in- dustry, focusing on 2014 data. I use a structural model to estimate demand and test several supply models, including noncooperative competition, perfect collusion, and tacit coordination. There are three different types of tacit coordination, formed by multimarket contact, common ownership, and codeshare agreement, respectively. I find that the model that fits the data best is a tacit coordination model with coalitions between airlines with at least 30% of their markets overlapped and using price rather than quantity as the strategic variable. I further analyze the consumer welfare loss, each carrier＇s profit gains, and changes in market variables due to the tacit coordination.
