This paper uses unique data on access to airport facilities to study the strategic entry, exit, and capacity decisions of firms in the US airline industry. I estimate a dynamic equilibrium model in which forward-looking firms invest in seating capacity and play a capacity-constrained pricing...

This paper studies the relationship between demand uncertainty — the key source of excess capacity — and capacity utilization in the U.S. airline industry. We present a simple theoretical model that predicts that lower demand realizations are associated with higher demand volatility. This...