An Empirical Game-Theoretical Approach to Model a Price War in the Brazilian Airline Industry

Review of Transportation Literature, Vol. 2, No. 1, 2008

15 Pages Posted: 5 Jun 2010 Last revised: 17 Apr 2018

See all articles by José Maria Silveira

José Maria Silveira

Universidade Estadual de Campinas (UNICAMP) - Instituto de Economia

Alessandro V. M. Oliveira

Aeronautics Institute of Technology

Date Written: 2008

Abstract

This paper develops a model of post-liberalization price competition between airlines on the route Rio de Janeiro - São Paulo. The intense price competition episode culminated in the rupture of a thirty-nine year-old cooperative structure - the air shuttle service cartel. By modeling and estimating parameters of a two-stage Stackelberg game with incomplete information, we aim at contributing to the understanding of price war rationality in the airline industry.

Keywords: game theory, econometrics, price competition, airline, cartel

JEL Classification: L9

Suggested Citation

da Silveira, José Maria and Oliveira, Alessandro Vinícius Marques de, An Empirical Game-Theoretical Approach to Model a Price War in the Brazilian Airline Industry (2008). Review of Transportation Literature, Vol. 2, No. 1, 2008. Available at SSRN: https://ssrn.com/abstract=1621026

José Maria Da Silveira

Universidade Estadual de Campinas (UNICAMP) - Instituto de Economia ( email )

Sao Paulo, Campinas
Brazil

Alessandro Vinícius Marques de Oliveira (Contact Author)

Aeronautics Institute of Technology ( email )

Praça Marechal Eduardo Gomes, 50
São José dos Campos, 12.228-900
Brazil

HOME PAGE: http://www.ita.br

Register to save articles to
your library

Register

Paper statistics

Downloads
101
Abstract Views
556
rank
260,196
PlumX Metrics