Download This PaperCommon Subcontracting and Airline Prices
36 Pages Posted: 8 May 2020 Last revised: 26 Dec 2023
Date Written: April 14, 2020
Abstract
In the US airline industry, independent regional airlines fly passengers on behalf of several national airlines across different markets, giving rise to common subcontracting. On the one hand, we find that subcontracting is associated with lower prices, consistent with the notion that regional airlines tend to fly passengers at lower costs than major airlines. On the other hand, we find that common subcontracting is associated with higher prices. These two countervailing effects suggest that the growth of regional airlines can have anticompetitive implications for the industry.
Keywords: Airlines, Common Subcontracting, Anticompetitive Pricing
JEL Classification: D22, L12, L93
Suggested Citation: Suggested Citation