Premium
EMPIRICAL ANALYSIS OF INTER‐FIRM RIVALRY BETWEEN JAPANESE FULL‐SERVICE AND LOW‐COST CARRIERS
Author(s) -
Murakami Hideki
Publication year - 2011
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2010.00537.x
Subject(s) - rivalry , competition (biology) , low cost carrier , full service , welfare , economic surplus , economics , service (business) , consumer welfare , microeconomics , business , industrial organization , commerce , market economy , economy , marketing , ecology , biology
This paper empirically analyzes dynamic change in inter‐firm rivalry between Japanese low‐cost carriers (LCC) and full‐service carriers, and deduces the dynamic change in consumer surplus after an LCC enters a market. Our findings are that: (i) the conduct parameters of LCC and reacting full‐service carriers were extraordinarily low when competition started; (ii) the conduct parameters were restored to, or even exceeded, the pre‐entry level in the third year of LCC entry; and (iii) gains in total welfare were recognized for five of the nine markets, whereas in three markets only the airline industry benefited, and in one market, total welfare decreased.