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Competition and market power in the European airline industry: 1976–90
Author(s) -
Captain Purvez F.,
Sickles Robin C.
Publication year - 1997
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/(sici)1099-1468(199705)18:3<209::aid-mde803>3.0.co;2-d
Subject(s) - monopoly , oligopoly , competition (biology) , market power , market structure , economics , product differentiation , product (mathematics) , industrial organization , predatory pricing , business , market economy , ecology , geometry , mathematics , biology , welfare
In this paper, we study the market power of European airlines in an oligopoly structure with product differentiation for the period 1976–1990 and test the monopoly hypothesis (Captain, 1993). The paper analyzes the level of competition among eight major European airlines and finds little evidence for market power in the industry over that period. One of our main findings is that the high prices in Europe are not entirely due to the bilateral agreements (leading to possible monopoly power), but rather are a result of very high cost structures in the industry. These results are broadly in agreement with those of Roeller and Sickles (1994) which analyzes these issues in the European Industry by estimating a structural, two‐stage game. © 1997 John Wiley & Sons, Ltd.