Equilibrium and Welfare in Unregulated Airline Markets.
This article analyzes the equilibrium and welfare in unregulated airline markets. The demand for air transportation in a stylized city pair market is assumed to depend upon the ticket price and two aspects of service quality, flight frequency and the load factor. The results of the analysis have imp...
| Publicado en: | American Economic Review Vol. 69; no. 2; pp. 92 - 96 |
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| Formato: | Artículo |
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American Economic Association
May79
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=hlh&AN=4496836&site=ehost-live header: @attributes: shortDbName: hlh uiTerm: 4496836 longDbName: Humanities International Complete uiTag: AN controlInfo: bkinfo: jinfo: jid: 00028282 AER jtl: American Economic Review issn: 00028282 maglogo: N pubinfo: dt: May79 vid: 69 iid: 2 pid: 22 pub: American Economic Association artinfo: ui: 4496836 ppf: 92 ppct: 4 formats: tig: atl: Equilibrium and Welfare in Unregulated Airline Markets. aug: au: Panzar, John C. affil: Bell Laboratories su: Economic equilibrium United States. Civil Aeronautics Board Airline industry Commercial aeronautics Political planning United States sug: subj: United States Economic equilibrium United States. Civil Aeronautics Board Airline industry Commercial aeronautics Political planning ab: This article analyzes the equilibrium and welfare in unregulated airline markets. The demand for air transportation in a stylized city pair market is assumed to depend upon the ticket price and two aspects of service quality, flight frequency and the load factor. The results of the analysis have important implications for both public policy and the direction to be taken in future empirical research. The divergence between the Nash equilibrium and a zero profit welfare optimum suggests that, in theory, a policy of price regulation and free entry would yield higher welfare than one of complete deregulation. However, whether or not one wishes to retain the current unwieldy regulatory apparatus in order to improve market performance must ultimately depend upon the quantitative divergence of the unregulated equilibrium from the welfare optimum. It can be demonstrated that the magnitude of this divergence depends quite directly on the structural effects of load factor changes on market demand. As noted earlier, whether or not a market admits the possibility of a zero profit welfare optimum depends upon the structural effects of frequency on market demand. Therefore intelligent policy formulation clearly requires accurate estimation of structural air travel demand functions capable of isolating the effects of frequency and load factor as well as price. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: Y dt: @attributes: year: 1979 holdings: @attributes: islocal: N |
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