Download this Paper Open PDF in Browser

Multimarket Contact and On-Time Performance in the Us Airline Industry

34 Pages Posted: 5 Oct 2006 Last revised: 13 May 2014

Jeffrey Prince

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Daniel H. Simon

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Date Written: October 4, 2006

Abstract

We examine the impact of multimarket contact on on-time performance in the airline industry. Using flight-level data for more than 3.5 million flights, we find that increases in multimarket contact lead to increases in delays, and this result is robust to several delay measures and the inclusion of carrier-route, as well as month, fixed effects. We further determine that the effect is primarily in the form of departure delays, and not due to changes in scheduled flight times or time spent in the air. These findings provide support for the mutual forbearance hypothesis, and suggest that multimarket contact facilitates tacit collusion not only on price - but also on quality.

Keywords: Airlines, Multimarket contact, Mutual forebearance, On-Time performance

JEL Classification: L1, L13, L93

Suggested Citation

Prince, Jeffrey and Simon, Daniel H., Multimarket Contact and On-Time Performance in the Us Airline Industry (October 4, 2006). Available at SSRN: https://ssrn.com/abstract=934840 or http://dx.doi.org/10.2139/ssrn.934840

Jeffrey Prince (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

Daniel H. Simon

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

Paper statistics

Downloads
292
Rank
87,125
Abstract Views
1,963