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HUB‐AIRPORT COMPETITION: CONNECTING TIME DIFFERENTIATION AND CONCESSION CONSUMPTION *
Author(s) -
HSIN LIN MING
Publication year - 2006
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/j.1467-8454.2006.00295.x
Subject(s) - competition (biology) , consumption (sociology) , disadvantage , business , service (business) , industrial organization , transport engineering , marketing , engineering , computer science , ecology , social science , artificial intelligence , sociology , biology
This paper develops a network model to analyse the economic effects resulting from the non‐price competition between the home country's and neighbouring country's hub‐airports. Focusing on the trade‐off relationship between the length of the connecting time in the hub‐airport and the consumption opportunities of the transfer passengers, we demonstrate theoretically that even though the hub‐airport bears a cost disadvantage over its rival in providing the hub‐airport service, it still has a chance to earn more profits than its rival by the setting of the connecting time. This finding suggests a new methodology for hub‐airports that attempt to alleviate price competition.