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Journal of Economic Theory and Econometrics
Journal of the Korean Econometric Society
Inter-Firm Rivalry: Maximum or Minimum Departure Flight Times Differentiation?
Vol.27, No.3, September 2016, 1–30
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Joo Yeon Sun
(Global Leadership Division, Yonsei University)
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Abstract
This paper explores the impact of concentration levels on airline flight scheduling
behaviors. Airline-level data were collected for each of the five domestic Jeju
Island non-stop routes from June 2006 to June 2010. Unlike previous studies on
the U.S. airline industry, the present empirical findings suggest that the decrease
in concentration (increase in competition) on the Jeju Island routes is associated
with smaller inter-firm departure times differentiation. We confirm that the
smaller inter-firm differentiation is the driving force of the decline in departure
times differentiation with competition. This tendency for less inter-firm differentiation
is weaker on the routes with LCCs.In the presence of legacy carriers’
diversified responding strategies on the routes with significant entry of low-cost
carriers (LCCs), independent LCCs differentiate their flight services from those
of legacy carriers through maximum product differentiation.
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Keywords
Airline, Low-cost carriers, Two-brand strategy, Product differentiation, Deregulation |
JEL classification codes
L51, L93 |
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