The Review of Economics and Statistics Vol. 97 No. 5 2015
Barriers to Entry in the Airline Industry: A Multidimensional Regression-Discontinuity Analysis of AIR-21
Abstract
We investigate the success of legislation aimed at increasing competition at highly concentrated U.S. airports, mainly by forcing these airports to increase the availability of scarce facilities. We use a multidimensional regression-discontinuity approach to exploit a sharp discontinuity in the law’s implementation and identify its effects. We find that fares decrease by 13.4% (20.2%) in markets with one (both) end point(s) covered. Approximately half of the decline is driven by the entry of low-cost carriers. We find little evidence that the fare declines were accompanied by a diminished quality of service, and passenger volumes increased, which suggests the legislation improved consumer welfare.
- DOI
- 10.1162/rest_a_00455
- Volume
- 97
- Issue
- 5
- Pages
- 1002-1022
- Language
- en
- Sources
- openalex crossref