Since deregulation, start-ups come and go. Big airlines seem to survive on the basis
of the monopoly power they derive from their terminal slots at major airports.
Otherwise airlines might be the classic case of a declining cost industry with few
barriers to entry making it impossible for
This is interesting. What is the source of the monopoly power over the
slots? How are the slots allocated?
Second, absent that monopoly power and given the effects of competition,
wouldn't we expect to see re-regulation of the industry to end the "anarchy"
of the market? Perhaps even a
William Dickens wrote:
Since deregulation, start-ups come and go. Big airlines seem to survive on the basis
of the monopoly power they derive from their terminal slots at major airports.
Otherwise airlines might be the classic case of a declining cost industry with few
barriers to entry
I'm not sure how the slots are allocated, but I believe it is done when the airport is
built or expanded by the airport authorities which are local government entities. --
Bill Dickens
[EMAIL PROTECTED] 01/17/01 09:30AM
This is interesting. What is the source of the monopoly power over the
I'm skeptical of the claim that airlines are a declining cost industry with low
barriers to entry. Granted, a full plane has probably only slightly higher
costs than an empty one, but eventually you have to buy another plane or turn
away business. How many investors will put the money into
This doesn't seem consistent with the usual story that big airlines want
slots allocated by competitive bidding, while small airlines don't. If
the slots are the source of the monopoly power, competitive bidding
would lead to full dissipation of the rents, no?
Not at all. The network economies
William Dickens wrote:
This doesn't seem consistent with the usual story that big airlines want
slots allocated by competitive bidding, while small airlines don't. If
the slots are the source of the monopoly power, competitive bidding
would lead to full dissipation of the rents, no?
Not
And what do you say on the predation thing?
I'm not sure. I wouldn't be surprised if it was true, but I don't think you need any
predation to explain why new entrants would be very unstable and have low survival
rates in a market with significant economies of scale but no effective barriers
