Tuesday, June 8, 2010

Price War in the Brazilian Airline Industry

Blog readers may be interested in Jose Maria Silveira & Alessandro V.M. Oliveira's An Empircal Game-Theoretical Approach to Model a Price War in the Brazilian Airline Industry, 2 Rev. Transp. Lit. 7 (2008) (available from SSRN here).  From the abstract:

This paper develops a model of post-liberalization price competition between airlines on the route Rio de Janeiro - São Paulo. The intense price competition episode culminated in the rupture of a thirty-nine year-old cooperative structure - the air shuttle service cartel. By modeling and estimating parameters of a two-stage Stackelberg game with incomplete information, we aim at contributing to the understanding of price war rationality in the airline industry.


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