Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/33171
Title: Effects of transport service differentiation in the US domestic airline market
Authors: Fu, X
Dresner, M
Oum, TH
Keywords: Almost ideal demand system
Low cost carrier
Product differentiation
Issue Date: 2011
Publisher: Pergamon Press
Source: Transportation research. Part E, Logistics and transportation review, 2011, v. 47, no. 3, p. 297-305 How to cite?
Journal: Transportation research. Part E, Logistics and transportation review 
Abstract: This study proposes a framework to identify and measure the extent of product differentiation among services provided by transportation firms, and applies it to the US domestic airline markets. By formulating and estimating an Almost Ideal Demand System and a set of price response equations for competing carriers, we investigate empirically the degree of substitutability between the services provided by Full Service Airlines (FSAs) and Low Cost Carriers (LCCs). Our results indicate that there is a significant differentiation in services provided by FSAs and LCCs. As a result, the presence of LCCs alone will not ensure healthy competition in a market. Therefore, it is important for public policy makers to attempt to maintain competition between FSAs even in the markets where LCCs have substantial market shares.
URI: http://hdl.handle.net/10397/33171
ISSN: 1366-5545
EISSN: 1878-5794
DOI: 10.1016/j.tre.2010.11.002
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