Abstract
In this paper we review the literature on static entry games and show how they can be used to estimate the market structure of the airline industry. The econometrics challenges are presented, in particular the problem of multiple equilibria and some solutions used in the literature are exposed. We also show how these models, either in the complete information setting or in the incomplete information one, can be estimated from i.i.d. data on market presence and market characteristics. We illustrate it by estimating a static entry game with heterogeneous firms by Simulated Maximum Likelihood on European data for the year 2015.
Keywords
entry, airlines, multiple equilibria, estimation, industrial organization.;
Reference
Christian Bontemps, and Raquel Menezes Bezerra Sampaio, “Entry games for the airline industry”, TSE Working Paper, n. 20-1108, May 2020.
See also
Published in
TSE Working Paper, n. 20-1108, May 2020