The impact of liberalization on market structure in the European airline industry.

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" The impact of liberalization on market structure in the European airline industry. "
Marin-Uribe, Pedro Luis.

Document Type	:	Latin Dissertation
Record Number	:	1093894
Doc. No	:	TLets307656
Main Entry	:	Marin-Uribe, Pedro Luis.
Title & Author	:	The impact of liberalization on market structure in the European airline industry.\ Marin-Uribe, Pedro Luis.
College	:	London School of Economics and Political Science (University of London)
Date	:	1995
student score	:	1995
Degree	:	Ph.D.
Abstract	:	The purpose of this thesis is to analyze the impact of liberalization onmarket structure in the European airline industry. The following chapters focuson three interrelated aspects: airlines' pricing behaviour and determinants ofdemand, differences between European flag carriers and independent airlines inprofits and probability of entry in a route and their main determinants, and theeffect of different regulatory policies on the productivity of European carriers.Chapter I proposes a model that explains firms' behaviour and shows that,after the liberalization, firms exploit their cost advantages and differentiate theirproducts more, but market structure still depends on access to airport facilities andother ancillary services controlled by the flag carriers. These results differ fromAmerican evidence in that I find that the effect of airport presence on pricesthrough lower costs more than offsets the effect through higher perceived quality.Chapter II develops an empirical model of entry, distinguishing betweenEuropean flag carriers which are highly regulated at the beginning of the eighties,and independent airlines. I find that the latter enjoy sunk cost advantages but getlower variable profits than the former. This means that possible efficiencydisadvantages suffered by the flag carriers are more than offset by their higherperceived quality, leading to a situation in which they are less likely to enter aroute, but also less likely to exit.Finally, chapter III specifies and estimates a production function for the airline industry, identifying firms' network characteristics and efficiency as themain determinants of their productivity. The results show that the introduction ofliberal bilateral agreements by some European governments has given their flagcarriers incentives to start adjusting their structure in anticipation of futureliberalization in the European market while other European flag carriers havedelayed this adjustment.
Subject	:	Internal and EU commerce consumer affairs
Added Entry	:	London School of Economics and Political Science (University of London)