Actual, Adjacent, and Potential Competition Estimating the Full Effect of Southwest Airlines
By S. Morrison. Journal of Transport Economics and Policy, 2001
379 citations recorded by the source corpus.
Southwest Airlines is frequently credited with having an important influence on the success of airline deregulation in the United States. This paper uses an original set of competition variables to estimate the extent of that influence in 1998. The estimated savings – due to actual, adjacent, and potential competition from Southwest – were $12.9 billion. Southwest's low fares were directly responsible for $3.4 billion of these savings to passengers. The remaining $9.5 billion represents the effect that actual, adjacent, and potential competition from Southwest had on other carriers' fares. These savings amount to 20 per cent of the airline industry's 1998 domestic scheduled passenger revenue and slightly more than half the fare reductions attributed to airline deregulation. From a policy perspective, these results are both troubling and encouraging. On the one hand, it is troubling to find that a large part of the fare reductions from airline deregulation is due to one carrier. On the other hand, if entry by a carrier with the appropriate characteristics can make such a difference, policies that encourage entry – for example, relaxing the restriction on entry by foreign-owned carriers – may have a large impact on passenger welfare.
Subfields: Economics and Econometrics, Media Technology, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/8ce19b3d95968ce1b9601490410068ef1ca1f8c0
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Citations in the corpus
- Low-cost carriers in Asia: Deregulation, regional liberalization and secondary airports (2008, background): “In effect, Morrison (2001) estimated that the savings due to competition from Southwest Airlines amount to more than half the fare reductions attributed to the US airline deregulation.”
- Domestic Code Sharing, Alliances, and Airfares in the U.S. Airline Industry (2007, background): “Likewise, since markets with a high proportion of vacation travelers tend to have lower average fares, we follow Morrison (2001) by including sunbelt destj , a dummy variable that takes the value 1 if the destination of market j is in one of the following states or territories: California, Nevada, A”
- Should China further expand its high-speed rail network? Consider the low-cost carrier factor (2017, positive): “…in LCC development, LCCs have been proved to be an efficient intercity transport mode in the US, Europe, and Southeast Asia in terms of stimulating traffic and lowering prices (e.g., Whinston and Collins, 1992; Windle and Dresner, 1995, 1999; Morrison, 2001; Hofer et al., 2008; Donzelli, 2010).”
- Anticompetitive Effects of Common Ownership (2018, neutral): “However, Gayle and Wu (2012) show that simultaneity bias is negligible, and therefore the literature in general does not instrument (Morrison, 2001; Gayle and Wu, 2012; Brueckner, Lee, and Singer, 2013).”
- The Price Effect of Eliminating Potential Competition: Evidence from an Airline Merger (2010, neutral): “, Morrison, [1996]), or potential competitors with some small minimum share of traffic at an endpoint of the route (e.”
- Air travel choices in multi-airport markets☆ (2006, methodology): “This type of effect is discussed in Morrison (2001), who finds that the presence of Southwest at nearby airports disciplines carriers at any particular airport, but the effect is weaker compared to”
- Air Transport Liberalization and Its Impacts on Airline Competition and Air Passenger Traffic (2009, methodology): “The striking finding by Morrison (2001) – that the savings due to competition from a single LCC, in the name of Southwest Airlines, amount to more than half the fare reductions attributed to the U.S. airline deregulation – suggests that policies that encourage LCC entry and growth may have a…”
- Is the Effect of Competition on Price Dispersion Nonmonotonic? Evidence from the U.S. Airline Industry (2014, background): “Although many studies define route based on the two end-point airports, a few papers (see Morrison, 2001; Berry & Jia, 2010) discuss possible 14 For example, without this treatment, a round-trip ticket from Philadelphia to Boston would appear as two tickets in the sample.”