We analyze the effect of mergers on various aspects of airline performance during the period 1970-84, using a panel data set constructed by Caves et al. Estimates derived from a simple "matched pairs" statistical model indicate that these mergers were associated with reductions in unit cost. The...

Previous research has suggested that firms in a number of industrieshave considerable market power, in the sense that their prices exceedtheir marginal costs. However, the observed profits of those industriesare not nearly as high as would occur under full exploitation of the marketpower with a...

U.S. airlines have lost nearly $60 billion (2009 dollars) in domestic markets since deregulation, most of it in the last decade. More than 30 years after domestic airline markets were deregulated, the dismal financial record is a puzzle that challenges the economics of deregulation. I examine...

This study attempts to explain the general pattern of aircraft hijacking in the U.S. between 1361 and 1976, the reasons for the dramatic reduction in hijackings after 1972, and the costs and benefits of regulation instituted in 1973 that required mandatory preboarding searches of all passengers...

The behavior of firms in financial distress has attracted considerable academic and policy interest in recent years. The turmoil in the U.S. airline industry has triggered much of the public policy discussion, as some observers have argued that airlines in financial distress, particularly those...

Network planning models, which forecast the profitability of airline schedules, support many critical decisions, including equipment purchase decisions. Network planning models include an itinerary choice model that is used to allocate air total demand in a city pair to different itineraries....

This papers analyzes dispersion in the prices that an airline charges to different customers on the same route. Such variation in airlines fares is substantial: the expected absolute difference in fares between two of an airline's passengers on a route averages thirty-six percent of the...

In this paper we construct a short run model of the firm describing the behavior of thirteen U.S. airlines during the difficult transition to deregulation. Several modeling scenarios are developed to assess three common assumptions in cost studies: the use of time as a proxy for technological...

In a market-clearing economy, declines in demand from one sector do not cause large declines in aggregatge output because other sectors expand. The key price mediating the response is the interest rate. A decline in the rate stimulates all categories of spending. But in a low-inflation economy,...

The extant literature linking slack time to innovation focuses on how slack time facilitates creative activities such as ideation, experimentation, and prototype development. We turn attention to how slack time may enable activities that are less creative but still important for innovation,...