Airline Schedule Competition: Product-Quality Choice in a Duopoly Model
Jan K. Brueckner
University of California, Irvine - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Universitat Rovira i Virgili (URV)
CESifo Working Paper Series No. 1731
This paper presents a simple model of airline schedule competition that circumvents the complexities of the spatial approach used in earlier papers. Consumers choose between two duopoly carriers, each of which has evenly spaced flights, by comparing the combinations of fare and expected schedule delay that they offer. In contrast to the spatial approach, the particular departure times of individual flights are thus not relevant. The model generates a number of useful comparative-static predictions, while welfare analysis shows that equilibrium flight frequencies tend to be inefficiently low.
Number of Pages in PDF File: 32
JEL Classification: L0, L9working papers series
Date posted: June 13, 2006
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