The Nonlinear Effects of Market Structure on Service Quality: Evidence from the U.S. Airline Industry

Kang Hua CAO, Betty Krier, Chia Mei Liu*, Brian McNamara, Jerrod Sharpe

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

10 Citations (Scopus)

Abstract

This paper revisits the topic of the effect of airline competition on service quality, but allowing for nonlinear effects. Using a panel of monthly data for 5472 route-carrier combinations from 2005:4Q through 2012:4Q, we find that the average length of flight delays and cancellation rates increase with the concentration level. Worse service quality is linked to less competition. In addition, we find that the relationships between our measures of service quality and market concentration are nonlinear, so that the scale of the effects of a given change in airline competition appears to depend on the initial level of competition.

Original languageEnglish
Pages (from-to)43-73
Number of pages31
JournalReview of Industrial Organization
Volume51
Issue number1
DOIs
Publication statusPublished - 1 Aug 2017

Scopus Subject Areas

  • Economics and Econometrics
  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management of Technology and Innovation

User-Defined Keywords

  • Airlines
  • Competition
  • Flight delays and cancellations
  • Market structure
  • Nonlinear
  • Service quality

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