21 research outputs found
Congestion and Market Structure in the Airline Industry
Empirical research on the relationship between market congestion and the
market competitive level largely falsifies the positive relationship
predicted by theoretical models. In this paper, I exploit the airline
industry network structure and focus on the level of congestion during
periods in which passengers cross-connect to their final destinations.
About 70% of hub airport flights depart or land during these periods.
The empirical analysis establishes a strong positive relationship.
Furthermore, based on a simple theoretical model, I am able to quantify
the potential time savings from eliminating congestion externalities and
find that, on average, a flight can save 2 minutes of flight time at its
departing airport and another 1.5 minutes at its destination airport. I
also find that airlines choose to pad their schedule particularly on
competitive routes, presumably to attract uninformed passengers
Congestion and Market Structure in the Airline Industry
Empirical research on the relationship between market congestion and the
market competitive level largely falsifies the positive relationship
predicted by theoretical models. In this paper, I exploit the airline
industry network structure and focus on the level of congestion during
periods in which passengers cross-connect to their final destinations.
About 70% of hub airport flights depart or land during these periods.
The empirical analysis establishes a strong positive relationship.
Furthermore, based on a simple theoretical model, I am able to quantify
the potential time savings from eliminating congestion externalities and
find that, on average, a flight can save 2 minutes of flight time at its
departing airport and another 1.5 minutes at its destination airport. I
also find that airlines choose to pad their schedule particularly on
competitive routes, presumably to attract uninformed passengers
The Impact of Global Financial Crisis on Emerging Asian Economies
textabstractWe study customers' adoption and subsequent switching decisions with regard to a menu of three-part tariff plans offered by a commercial bank. Using a rich panel data set covering 70,510 fee-based checking accounts over 30 months, before and after the introduction of the plans, we find that most customers adopt noncost-minimizing plans, preferring plans with large monthly allowances and high fixed payments. Furthermore, after adoption, customers who exceed their allowances and consequently pay overage fees are more likely to switch to plans with larger allowances than customers who do not experience such fees. Notably, after switching, these overage-paying customers pay higher monthly payments than before. In contrast, switching customers who did not pay overage payments before switching pay less after switching. Our findings, unlike those of previous research on experience-based learning, suggest that the behavior of experienced customers does not converge to the predictions of neoclassical models. We propose that "overage aversion," which is closely related to loss aversion and mental accounting, is the most plausible explanation for our findings
Unshrouding Effects on Demand for a Costly Add-On: Evidence from Bank Overdrafts in Turkey
Models of shrouding predict that firms lack incentives to compete on add-on prices. Working with a large Turkish bank to test SMS direct marketing promotions to 108,000 existing checking account holders, we find that messages promoting a large discount on the overdraft interest rate reduce overdraft usage. In contrast, messages that mention overdraft availability without mentioning price increase usage. Neither change persists long after messages stop, suggesting that induced overdrafting is not habit-forming. Our results are consistent with a model of limited memory and attention
Congestion and Market Structure in the Airline Industry
Empirical research on the relationship between market congestion and the market competitive level largely falsifies the positive relationship predicted by theoretical models. In this paper, I exploit the airline industry network structure and focus on the level of congestion during periods in which passengers cross-connect to their final destinations. About 70% of hub airport flights depart or land during these periods. The empirical analysis establishes a strong positive relationship. Furthermore, based on a simple theoretical model, I am able to quantify the potential time savings from eliminating congestion externalities and find that, on average, a flight can save 2 minutes of flight time at its departing airport and another 1.5 minutes at its destination airport. I also find that airlines choose to pad their schedule particularly on competitive routes, presumably to attract uninformed passengers. JEL classification: L93; R41;Congestion; Air Transportation;