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

doi:10.1007/s11151-016-9544-x

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 journal › Journal article › peer-review

19 Citations (Scopus)

30 Downloads (Pure)

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 language	English
Pages (from-to)	43-73
Number of pages	31
Journal	Review of Industrial Organization
Volume	51
Issue number	1
DOIs	https://doi.org/10.1007/s11151-016-9544-x
Publication status	Published - 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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10.1007/s11151-016-9544-x

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

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.",

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

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