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Reactions to the entry of newcomer airlines

Author(s): Derick Moreira Baum

Journal: Journal of Transport Literature
ISSN 2238-1031

Volume: 1;
Issue: 2;
Start page: 110;
Date: 2007;
Original page

Keywords: entry | reactions | prices | air transportation

This work reviews the paper of Goolsbee and Syverson (2006). The authors study how incumbent carriers react to the threat of new entrants in the US air transportation industry. Data on the evolution of passengers and routes entered by Southwest Airlines were gathered to identify some markets where the probability of the carrierĀ“s entry increases. When Southwest starts up operations at the endpoints of a route, but without entering the route itself, future entry probability increases considerably. The authors' major subject of research and contribution to the empirical literature is to econometrically investigate the incumbents' fares behavior on these "threatened" routes.
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