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An empirical model of entry and exit in airline markets

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Abstract

This article considers the effect of airline hub-and-spoke systems on the entry and exit behavior of rival firms in the U.S. airline industry. An analysis of simple entry and exit decisions provides insight into equilibrium conditions that are used to specify discrete choice econometric models. The empirical evidence indicates that hub-and-spoke network characteristics are significant determinants of entry and exit decisions in individual citypair markets.

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Authors and Affiliations

  1. J.W. Wilson Associates, Inc., 2715 ‘M’ Street, N.W., 20007, Washington, D.C., USA

    Robert A. Sinclair

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  1. Robert A. Sinclair
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Additional information

This paper is a revision of work in my Ph.D. dissertation at the University of Pittsburgh. I thank my committee: Esther Gal-Or, Patty Beeson, John Ham, Asatoshi Maeshiro, and Reuben Slesinger. I have also benefitted from the comments of two anonymous referees and the comments and encouragement of Doug Greer.

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Sinclair, R.A. An empirical model of entry and exit in airline markets. Rev Ind Organ 10, 541–557 (1995). https://doi.org/10.1007/BF01026880

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