Neven, Damien J.; Röller, Lars-Hendrik; Zhang, Zhentang - 2002
Empirical work on price-cost margins often treats costs as exogenous. Allowing for endogenous costs when estimating … third equation, which endogenizes costs. We implement the model using data for eight European airlines from 1976-1994, and … show that the treatment of endogenous costs has important implications for the measurement of price-cost margins and the …
