Assessing the potential economic impacts of aviation policy measures is a recurrent topic. Examples of such policy measures are public investments in aviation infrastructure, the liberalisation of air transport markets, the introduction of aviation taxes or environmental restrictions on airport...

We study the anticompetitive effects of predatory pricing and the efficacy of three policy responses. In a series of experiments where an incumbent and a potential entrant interact, we compare prices, market structures and welfare. Under a laissez-faire regime, the threat of post-entry price...