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An Empirical Analysis of Market Structure and Competition in the US Airline Industry

Isaias Blair

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Published in Airline Economics: An Empirical Analysis Of Market Structure And Competition In The US Airline Industry

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The US airline industry has undergone significant changes in recent decades, including deregulation, consolidation, and the rise of low-cost carriers. These changes have had a major impact on the market structure and competition in the industry. This paper presents an empirical analysis of the market structure and competition in the US airline industry.

Data and Methods

The data used in this study come from the Bureau of Transportation Statistics (BTS) and include data on airline revenues, costs, and market shares. The data were analyzed using a variety of statistical techniques, including regression analysis and market concentration measures.

Airline Economics: An Empirical Analysis of Market Structure and Competition in the US Airline Industry

by Christopher D. Nolan

4.6 out of 5

Language	:	English
File size	:	930 KB
Text-to-Speech	:	Enabled
Screen Reader	:	Supported
Enhanced typesetting	:	Enabled
Word Wise	:	Enabled
Print length	:	101 pages

Results

The results of the analysis show that the US airline industry is highly concentrated, with the four largest airlines accounting for over 80% of the market share. The industry is also characterized by high barriers to entry, with new entrants facing significant challenges in competing with the established airlines.

The analysis also found that competition in the industry has declined in recent years. This is due to a number of factors, including the consolidation of the industry and the rise of low-cost carriers. Low-cost carriers have put pressure on the traditional airlines to lower their prices and offer more amenities.

Discussion

The findings of this study have important implications for the US airline industry. The high level of concentration in the industry raises concerns about the potential for anti-competitive behavior. The decline in competition in the industry could also lead to higher prices and lower quality of service for consumers.

The results of this study also suggest that the US airline industry is likely to continue to be characterized by high concentration and low competition. This is due to the significant barriers to entry and the increasing dominance of low-cost carriers.

Policy Implications

The findings of this study have a number of implications for policymakers. The high level of concentration in the industry suggests that there may be a need for antitrust enforcement to prevent anti-competitive behavior. The decline in competition in the industry could also justify government intervention to promote competition.

One possible policy option is to increase the number of slots available at congested airports. This would make it easier for new entrants to compete with the established airlines. Another policy option is to provide financial assistance to new entrants. This could help new entrants to overcome the significant barriers to entry in the industry.

The US airline industry is a highly concentrated and competitive industry. The industry has undergone significant changes in recent decades, including deregulation, consolidation, and the rise of low-cost carriers. These changes have had a major impact on the market structure and competition in the industry. The results of this study have important implications for the industry and for policymakers.

Airline Economics: An Empirical Analysis of Market Structure and Competition in the US Airline Industry

by Christopher D. Nolan

4.6 out of 5