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Competition and service quality: New evidence from the airline industry

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  • Greenfield, Daniel

Abstract

Previous studies examine the relationship between competition and airline service quality by regressing on-time performance on market structure. These studies implicitly assume that market structure is exogenously determined with respect to service quality. To address the likely endogeneity of market structure I employ two distinct instrumental variables. The first is lagged market structure. The second exploits a global airline merger that induced differential variations in market structure across hundreds of airport-pair markets. I find that the effect of competition on airline delays is three times stronger than previous studies suggest.

Suggested Citation

  • Greenfield, Daniel, 2014. "Competition and service quality: New evidence from the airline industry," Economics of Transportation, Elsevier, vol. 3(1), pages 80-89.
    • Handle: RePEc:eee:ecotra:v:3:y:2014:i:1:p:80-89
    DOI: 10.1016/j.ecotra.2013.12.005
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