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Experience as a Barrier to Contestability in Airline Markets

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  • Baker, Samuel H
  • Pratt, James B

Abstract

Contrary to one of the predictions of the contestability hypothesis, price in deregulated U.S. passenger airline markets is related to actual competition from diversifying former intrastates and newly established carriers. More important, former intrastates have a larger impact on price than do newly established firms--a result consistent with these markets being imperfectly competitive because of an industry experience barrier to entry. Unlike actual competition, a measure of potential competition has no effect in constraining price. Copyright 1989 by MIT Press.

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  • Baker, Samuel H & Pratt, James B, 1989. "Experience as a Barrier to Contestability in Airline Markets," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 352-356, May.
    • Handle: RePEc:tpr:restat:v:71:y:1989:i:2:p:352-56
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    Cited by:

    1. Zhang, Anming & Zhang, Yimin, 2006. "Rivalry between strategic alliances," International Journal of Industrial Organization, Elsevier, vol. 24(2), pages 287-301, March.
    2. Natalia Zdanowska, 2019. "Integration into \'economie-monde and regionalisation of the Central Eastern European space since 1989," Papers 1911.00033, arXiv.org.
    3. Christos Pitelis & Mirko Schnell, 2002. "Barriers to Mobility in Europe's Civil Aviation Markets: Theory and New Evidence," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(2), pages 127-150, March.
    4. Roger Sherman, 2001. "The Future of Market Regulation," Southern Economic Journal, John Wiley & Sons, vol. 67(4), pages 782-800, April.
    5. Anderson, William P. & Gong, Gang & Lakshmanan, T.R., 2005. "Competition in a Deregulated Market for Air Travel: The U.S. Domestic Experience and Lessons for Global Markets," Research in Transportation Economics, Elsevier, vol. 13(1), pages 3-25, January.

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