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Entry games for the airline industry

Author

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  • Christian Bontemps

    (ENAC - Ecole Nationale de l'Aviation Civile, TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Raquel Menezes Bezerra Sampaio

    (UFRN - Universidade Federal do Rio Grande do Norte [Natal])

Abstract

In this paper we review the literature on static entry games and show how they can be used to estimate the market structure of the airline industry. The econometrics challenges are presented, in particular the problem of multiple equilibria and some solutions used in the literature are exposed. We also show how these models, either in the complete information setting or in the incomplete information one, can be estimated from i.i.d. data on market presence and market characteristics. We illustrate it by estimating a static entry game with heterogeneous firms by Simulated Maximum Likelihood on European data for the year 2015.

Suggested Citation

  • Christian Bontemps & Raquel Menezes Bezerra Sampaio, 2020. "Entry games for the airline industry," Post-Print hal-02137358, HAL.
    • Handle: RePEc:hal:journl:hal-02137358
    DOI: 10.4324/9780429021855
    Note: View the original document on HAL open archive server: https://hal.science/hal-02137358v2
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    Keywords

    Industrial organization; Entry; Multiple equilibria; Airlines; Estimation;
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