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City-Pairs Versus Airport-Pairs: A Market-Definition Methodology for the Airline Industry

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  • Jan Brueckner
  • Darin Lee
  • Ethan Singer

Abstract

This paper provides a methodology for deciding which airports warrant grouping in multi-airport metropolitan areas. The methodology is based on the comparability of incremental competition effects from nearby airports on average fares at a metropolitan area’s primary airport. Results from a quarterly panel data set for the period 2003–2009 provide strong evidence that city-pairs, rather than airport-pairs, are the appropriate market definition for analyses of passenger air transportation involving many (but not all) large metropolitan areas. Based on the proposed method, we offer a recommended list of airports that should be grouped when creating city-pairs for the analysis of competition in the US domestic airline industry. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Jan Brueckner & Darin Lee & Ethan Singer, 2014. "City-Pairs Versus Airport-Pairs: A Market-Definition Methodology for the Airline Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(1), pages 1-25, February.
    • Handle: RePEc:kap:revind:v:44:y:2014:i:1:p:1-25
    DOI: 10.1007/s11151-012-9371-7
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    References listed on IDEAS

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