You are warmly invited to this week's University of Leeds, Institute for Transport Studies Friday seminar:
On Sources of Market Power in the Airline Industry:
Panel Data Evidence from the US Airports
Presented by Dr Volodymyr Bilotkach, Newcastle Business School
Friday 20th April, 2.30-3.30 pm in the ITS Lecture Theatre, 36-40 University Road, University of Leeds
On Sources of Market Power in the Airline Industry: Panel Data Evidence from the US Airports
Authors: Volodymyr Bilotkach (Newcastle Business School), Paulos Ashebir Lakew (University of California, Irvine)
Abstract
A firm can obtain market power through its dominant position on the product market, or via control of a key resource. In particular, it has been argued that airport dominance was a more important source of market power in the US airline industry than route dominance. We examine this contention by analysing a 17-year panel of airport-level prices in the United States. We demonstrate that even though on average airport-level concentration appears to be the strongest source of market power; concentration on routes originating at an airport is the strongest predictor of price levels for large and medium hub airports. There is little evidence that either airport or route dominance significantly affect prices at medium and small hub airports. There is also little evidence that an airport's dominant carrier exerts market power beyond the level predicted by the airport or route dominance. Our results imply that consumer welfare losses due to airline consolidation can be concentrated in smaller communities, and related to changes in airport-level concentration. We provide a simple evaluation of the possible effects of two recent mergers (Delta - Northwest and United - Continental) in light of this finding, and suggest that the former consolidation event can potentially lead to non-trivial consumer welfare losses to travellers in over 30 small communities.
Volodymyr Bilotkach received his Ph.D. in Economics from the University of Arizona in 2005. Until last July, he was an Assistant Professor in Economics at the University of California, Irvine. He joined Newcastle Business School as a Senior Lecturer in September of 2011. Dr. Bilotkach's research focuses on various aspects of the aviation industry, from airline competition, alliances and mergers, to airport privatization and infrastructure investment. His papers appeared in Transportation Research Part A and B, Journal of Transport Economics and Policy, Regional Science and Urban Economics, and Journal of Regulatory Economics, among others. Dr. Bilotkach has advised the European Commission and the Netherlands Competition Authority on competition policy matters in the aviation sector, and is an Academic Fellow of the Airneth Aviation Research and Policy Network.
More details about the Institute for Transport Studies, as well as a map and directions can be found at: http://www.its.leeds.ac.uk/ All welcome, refreshments provided. Please get in contact for any further details.
Dr Caroline Mullen
Institute for Transport Studies
University of Leeds
Leeds
LS2 9JT
0113 343 5343
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