Tuesday, July 14, 2015
Yu Morimoto and Kohei Takeda, Kyoto University describe Policy of airline competition ~monopoly or duopoly~.
ABSTRACT: We show that monopoly is better than competition in term of social welfare for low frequency routes. Competition affects both flight schedules and airfares. Flight schedules get un-even interval by competition and this leads to large scheduling delay cost (SDC). The increment of SDC is large when the number of flights is small. For low frequency routes, the increment of SDC by competition overwhelms the decreasing in the airfare, so monopoly is better than competition.