Cristina Gualdani, Queen Mary University of London. "Price Competition and Endogenous Product Choice in Networks: Evidence from the US Airline Industry"

Department seminar. Cristina Gualdani is an Assistant Professor in Economics at Queen Mary University of London, School of Economics and Finance. She will present the paper: "Price Competition and Endogenous Product Choice in Networks: Evidence from the US Airline Industry".

A photograph of Cristina Gualdani

Cristina Gualdani
Source: cristinagualdani.com

Abstract:

We build and estimate a two-stage model of airline competition in which firms first form the networks of markets to be served and then compete in prices. We estimate our model using fares data on US domestic flights. We show that large hub-and-spoke operations lower marginal costs but increase fixed costs. We evaluate a merger between American Airlines and US Airways and compare it to the bankruptcy and disappearance of American Airlines. We also evaluate remedies imposed by the Department of Justice on the merging parties and find evidence they limited harm to consumers.

Link to the paper [PDF].

Published Mar. 17, 2022 10:35 AM - Last modified May 4, 2022 10:28 AM