Demand shifting across flights and airports in a spatial competition model

Authors

Diego Escobari, The University of Texas Rio Grande ValleyFollow
Sang-Yeob Lee

Document Type

Article

Publication Date

5-2012

Abstract

This paper investigates the nature of day-to-day competition between flights using a unique panel data set on prices and inventories. We use instrumental variables methods and several spatial autoregressive models (SAR) to estimate price reaction functions. The primary source of product differentiation is departure time. After controlling for flight-specific characteristics and various sources of price dispersion, we find important evidence of demand shifting between competing flights. Most of the shift is being captured by flights scheduled to depart within a 3-hour window. We find no evidence of demand shifting between airports.

Comments

Original published version available at https://doi.org/10.1007/s12076-012-0081-4

Recommended Citation

Escobari, D., Lee, SY. Demand shifting across flights and airports in a spatial competition model. Lett Spat Resour Sci 5, 175–183 (2012). https://doi.org/10.1007/s12076-012-0081-4

Publication Title

Lett Spat Resour Sci

DOI

10.1007/s12076-012-0081-4