A Dynamic Oligopoly Game of the US Airline Industry: Estimation and Policy Experiments

This paper studies the contribution of demand, costs, and strategic factors to the adoption of hub-and-spoke networks in the US airline industry. Our results are based on the estimation of a dynamic oligopoly game of network competition that incorporates three groups of factors that may explain hub-and-spoke networks: (1) travelers may value the services associated with the scale of operation of an airline in the hub airport; (2) operating costs and entry costs in a route may decline with the airline's scale of operation in the origin and destination airports (e.g., economies of scale and scope); and (3) a hub-and-spoke network may be an effective strategy to deter the entry of other carriers. We estimate the model using data from the Airline Origin and Destination Survey with information on quantities, prices, and entry and exit decisions for every airline company in the routes between the 55 largest US cities. As methodological contributions, we propose and apply a method to reduce the dimension of the state space in dynamic games, and a procedure to deal with the problem of multiple equilibria when using a estimated model to make counterfactual experiments. We find that the most important factor to explain the adoption of hub-and-spoke networks is that the cost of entry in a route declines importantly with the scale of operation of the airline in the airports of the route. For some of the larger carriers, strategic entry deterrence is the second most important factor to explain hub-and-spoke networks.Airline industry; Hub-and-spoke networks; Entry costs; Industry dynamics; Estimation of dynamic games; Counterfactual experiments in models with multiple equilibria.

A Dynamic Oligopoly Game of the US Airline Industry: Estimation and Policy Experiments

This paper studies the contribution of demand, costs, and strategic factors to the adoption of hub-and-spoke networks in the US airline industry. Our results are based on the estimation of a dynamic oligopoly game of network competition that incorporates three groups of factors which may explain the adoption of hub-and-spoke networks: (1) travelers value the services associated with the scale of operation of an airline in the hub airport (e.g., more convenient check-in and landing facilities); (2) operating costs and entry costs in a route may decline with an airline's scale operation in origin and destination airports (e.g., economies of scale and scope); and (3) a hub-and-spoke network may be an effective strategy to deter the entry of other carriers. We estimate the model using data from the Airline Origin and Destination Survey with information on quantities, prices, and entry and exit decisions for every airline company in the routes between the 55 largest US cities. As a methodological contribution, we propose and apply a simple method to deal with the problem of multiple equilibria when using the estimated model to predict the effects of changes in structural parameters. We find that the most important factor to explain the adoption of hub-and-spoke networks is that the cost of entry in a route declines very importantly with the scale of operation of the airline in the airports of the route. For some of the larger carriers, strategic entry deterrence is the second most important factor to explain hub-and-spoke networks.Airline industry; Hub-and-spoke networks; Entry costs; Industry dynamics; Estimation of dynamic games; Counterfactuals with multiple equilibria

A Dynamic Game of Airline Network Competition: Hub-and-Spoke Networks and Entry Deterrence

In a hub-and-spoke network, the total profit function of an airline is supermodular with respect to its entry decisions at different city-pairs. This source of complementarity implies that a hub-and-spoke network can be an effective strategy to deter entry of competitors. This paper presents a dynamic game of airlines network competition that incorporates this entry deterrence motive for using hub-and-spoke networks. We summarize the results of the estimation of the model, with particular attention to empirical evidence on the entry deterrence motive.Airline networks; Hub-and-spoke; Entry deterrence; Dynamic games; Supermodularity

Computerized Tomography and Reproducing Kernels

The X-ray transform is one of the most fundamental integral operators in image processing and reconstruction. In this article, we revisit its mathematical formalism, and propose an innovative approach making use of Reproducing Kernel Hilbert Spaces (RKHS). Within this framework, the X-ray transform can be considered as a natural analogue of Euclidean projections. The RKHS framework considerably simplifies projection image interpolation, and leads to an analogue of the celebrated representer theorem for the problem of tomographic reconstruction. It leads to methodology that is dimension-free and stands apart from conventional filtered back-projection techniques, as it does not hinge on the Fourier transform. It also allows us to establish sharp stability results at a genuinely functional level, but in the realistic setting where the data are discrete and noisy. The RKHS framework is amenable to any reproducing kernel on a unit ball, affording a high level of generality. When the kernel is chosen to be rotation-invariant, one can obtain explicit spectral representations which elucidate the regularity structure of the associated Hilbert spaces, and one can also solve the reconstruction problem at the same computational cost as filtered back-projection.Comment: 40 pages, 7 figure

Induction of Squamous Cell Carcinoma in p53-Deficient Mice after Ultraviolet Irradiation

Mutations of the p53 gene have been implicated as an important factor in the pathogenesis of ultraviolet light induced skin cancers. To examine the role of p53 in skin carcinogenesis, we observed the development of skin cancers in homozygous p53-deficient (–/–) mice and wild-type p53 (+/+ ) mice, after chronic ultraviolet B (290–320 nm) exposure. At a dose of 2J per m2 per s of ultraviolet B for 30min three times per week, all p53−/−mice developed skin tumors by week 12. All the p53−/−mice developed multiple tumors by week 16. The majority of the tumors occurred on the ears. None of the p53 +/+ mice developed skin tumors after 17 wk of UV exposure. Ten p53−/− tumors were examined histologically: five invasive squamous cell carcinomas, four squamous cell carcinomas in situ, and one actinic keratosis. p53−/− mice have a short life-span due to internal tumors or a deficiency in the immune system; however, ultraviolet B exposure did not significantly reduce the life-span of p53−/− mice. These results demonstrate that loss of wild-type p53 function shortens the latent period and predisposes the animals to the development of squamous cell carcinomas after ultraviolet irradiation

Kinematic decomposition of IllustrisTNG disk galaxies: morphology and relation with morphological structures

We recently developed an automated method, auto-GMM to decompose simulated galaxies. It extracts kinematic structures in an accurate, efficient, and unsupervised way. We use auto-GMM to study the stellar kinematic structures of disk galaxies from the TNG100 run of IllustrisTNG. We identify four to five structures that are commonly present among the diverse galaxy population. Structures having strong to moderate rotation are defined as cold and warm disks, respectively. Spheroidal structures dominated by random motions are classified as bulges or stellar halos, depending on how tightly bound they are. Disky bulges are structures that have moderate rotation but compact morphology. Across all disky galaxies and accounting for the stellar mass within 3 half-mass radii, the kinematic spheroidal structures, obtained by summing up stars of bulges and halos, contribute ~45% of the total stellar mass, while the disky structures constitute 55%. This study also provides important insights about the relationship between kinematically and morphologically derived galactic structures. Comparing the morphology of kinematic structures with that of traditional bulge+disk decomposition, we conclude: (1) the morphologically decomposed bulges are composite structures comprised of a slowly rotating bulge, an inner halo, and a disky bulge; (2) kinematically disky bulges, akin to what are commonly called pseudo bulges in observations, are compact disk-like components that have rotation similar to warm disks; (3) halos contribute almost 30% of the surface density of the outer part of morphological disks when viewed face-on; and (4) both cold and warm disks are often truncated in central regions.Comment: 20 pages, 14 figures. Accepted for publication in ApJ. The mass fraction catalogue and images of the kinematically derived galactic structures are publicly available (https://www.tng-project.org/data/docs/specifications/#sec5m