Topic: 22. Competition

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The Impact of Low Cost Carriers on Airport and Route Competition

The entry of a low cost carrier onto a route leads to lower prices and higher passenger counts, both on other routes at the same airport and on competing routes at neighbouring airports. These effects indicate that consumer gains from the entry of low cost carriers are higher than previously estimated. A case study and an econometric analysis are used to estimate these effects.

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An Analysis of Fortress Hubs in Airline Networks

This paper explores the possibility that the fortress hub is a consequence of the nature of airline hub-spoke rivalry. Entry into a competitor’s local market may reduce the entrant’s profit in his own market. As a result, there is a deterrent to entry if the negative effects are strong enough. The paper also examines the impacts of local competition on consumer surplus and total social surplus.

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A Structural Model of Intra-EU Duopoly Airline Competition

Using a two-countries/two-airlines framework, three different competition scenarios are analysed. These reflect the new EU competition rules. The results suggest that the use of hub-and-spoke networks results in significant welfare gains. In addition, the model shows that cross-border mergers may increase net social welfare.

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Competition and the Structure of Local Bus Markets

The aim of entry is to capture monopoly profits by displacing the incumbent or colluding. However, entrants have generally failed to do this. Incumbents have better local knowledge, and are often financially stronger. Contrary to the Government’s expectation on deregulation, the effect of potential entrants in controlling monopoly operators is weak.

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Modal Competition and Pricing in Grain transport

Since rail rates in the US were partially deregulated, they have been affected more strongly by competition and less by costs. The strength of competition from trucks depends on fuel prices and improvements in technology, and, on the demand side, on the availability of rail cars.

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