Airline Deregulation: The Cost Pieces of the Puzzle

This paper analyzes cost changes in the U.S. airline industry in the pre- and postderegulation era using a panel data set of airlines. Specifically, it seeks to disentangle cost changes attributable to technical change, economies of scale and density, and input prices. The authors estimate a purely general index of industry technical change and in turn analyze its determinants. Despite the slowing of productivity growth in the 1980s, deregulation does appear to have stimulated technical change due to more efficient route structures. Copyright 1995 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

[1]  Arthur S. De Vany,et al.  A forecast of air travel and airport and airway use in 1980 , 1972 .

[2]  A. DeVany,et al.  REVEALED VALUE OF TIME IN AIR TRAVEL , 1974 .

[3]  Arthur De Vany,et al.  The Revealed Value of Time in Air Travel , 1974 .

[4]  G. Douglas,et al.  Economic Regulation of Domestic Air Transport Theory and Policy. George W. Douglas and James C. Miller III. The Brookings Institution, 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036. 1974. 211p , 1975 .

[5]  Arthur S. De Vany,et al.  The Effect of Price and Entry Regulation on Airline Output, Capacity and Efficiency , 1975 .

[6]  Gary R. Saxonhouse,et al.  Estimated Parameters as Dependent Variables , 1976 .

[7]  Richard Schmalensee,et al.  Comparative Static Properties of Regulated Airline Oligopolies , 1977 .

[8]  Dale W. Jorgenson,et al.  Statistical inference for a system of simultaneous, non-linear, implicit equations in the context of instrumental variable estimation , 1979 .

[9]  Lawrence J. White,et al.  ECONOMIES OF SCALE AND THE QUESTION OF "NATURAL MONOPOLY" IN THE AIRLINE INDUSTRY , 1979 .

[10]  W. Hendricks,et al.  Regulation, Deregulation, and Collective Bargaining in Airlines , 1980 .

[11]  D. Jorgenson,et al.  U.S. Productivity Growth by Industry, 1947–73 , 1980 .

[12]  E E Bailey,et al.  THE CONTESTABILITY OF AIRLINE MARKETS DURING THE TRANSITION TO DEREGULATION. IN: AIR TRANSPORT , 1981 .

[13]  L. R. Christensen,et al.  MULTILATERAL COMPARISONS OF OUTPUT, INPUT, AND PRODUCTIVITY USING SUPERLATIVE INDEX NUMBERS* , 1982 .

[14]  L. R. Christensen,et al.  Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs Differ , 1984 .

[15]  Clifford Winston,et al.  CONCEPTUAL DEVELOPMENT IN THE ECONOMICS OF TRANSPORTATION: AN INTERPRETIVE SURVEY , 1985 .

[16]  M. Baily,et al.  The Productivity Slowdown, Measurement Issues, and the Explosion of Computer Power , 1989 .

[17]  Badi H. Baltagi,et al.  A General Index of Technical Change , 1988, Journal of Political Economy.

[18]  RECENT TRENDS IN REAL WAGES: EVIDENCE FROM HOUSEHOLD DATA , 1989 .

[19]  Clifford Winston,et al.  The Dynamics of Airline Pricing and Competition , 1990 .

[20]  Robert J. Gordon,et al.  Productivity in the Transportation Sector , 1991 .

[21]  The Structure of Production, Technical Change and Efficiency in a Multiproduct Industry: An Application to U.S. Airlines , 1991 .