Measuring Conduct in the Spanish Air Transport Industry

Abstract

The purpose of this study is to analyze the domestic air transport industry in Spain. This work has focused on the segment of business and we present a theoretical model of oligopolistic competition which could be empirically tested through three equations: demand, market structure and price. We contribute to develop creativity and innovation with the elaboration of a data studying 113 over 96 fortnight periods (2011-2015) where analyses how clients react to both strategic changes carried out by airlines (frequencies, capacity, prices) and changes in socio-economic factors. The analysis is performed by applying the econometric technique of instrumental variables. We find that that frequency competition -Cournot- is more important than competition in prices  -Bertrand-.