Scipediacontent: Scipediacontent moved page Draft Content 392582963 to Goolsbee Syverson 2008a

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Scipediacontent moved page Draft Content 392582963 to Goolsbee Syverson 2008a

Scipediacontent: Created page with " == Abstract == This paper examines how incumbents respond to the threat of entry of competitors, as distinguished from their response to competitors’ actual entry. It uses..."

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Created page with " == Abstract == This paper examines how incumbents respond to the threat of entry of competitors, as distinguished from their response to competitors’ actual entry. It uses..."

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== Abstract ==

This paper examines how incumbents respond to the threat of entry of competitors, as distinguished from their response to competitors’ actual entry. It uses a case study from the passenger airline industry—specifically, the evolution of Southwest Airlines’ route network—to identify particular routes where the probability of future entry rises abruptly. When Southwest begins operating in airports on both sides of a route but not the route itself, this dramatically raises the chance they will start flying that route in the near future. We examine the pricing of the incumbents on threatened routes in the period surrounding such events. We find that incumbents cut fares significantly when threatened by Southwest’s entry into their routes. This is true even after controlling in several ways for airport-specific operating costs. The response of incumbents seems to be limited only to the threatened route itself, and not to routes out of nearby competitor airports where Southwest does not operate (e.g., fares drop on routes from Chicago Midway but not Chicago O’Hare). The largest responses appear to be restricted to routes that were concentrated beforehand. Incumbents do experience short-run increases in their passenger loads concurrent with these fare cuts. This is consistent with theories implying incumbents will try to generate some longer-term loyalty among current customers before the entry of a new competitor. We examine evidence relating this demand-building motive to frequent flyer programs and find suggestive evidence in favor of this notion. There is only weak evidence that incumbents increase capacity on the routes.

== Original document ==

The different versions of the original document can be found in:

* [http://archive.nyu.edu/bitstream/2451/28399/2/Goolsbee_Syverson_04-04.pdf http://archive.nyu.edu/bitstream/2451/28399/2/Goolsbee_Syverson_04-04.pdf]

* [http://dx.doi.org/10.1162/qjec.2008.123.4.1611 http://dx.doi.org/10.1162/qjec.2008.123.4.1611]

* [http://dx.doi.org/10.3386/w11072 http://dx.doi.org/10.3386/w11072]

* [http://www.nber.org/papers/w11072.pdf http://www.nber.org/papers/w11072.pdf]

* [http://www.netinst.org/Goolsbee_Syverson.pdf http://www.netinst.org/Goolsbee_Syverson.pdf]

* [https://doi.org/10.3386/w11072 https://doi.org/10.3386/w11072]

* [http://academic.oup.com/qje/article-pdf/123/4/1611/5446913/123-4-1611.pdf http://academic.oup.com/qje/article-pdf/123/4/1611/5446913/123-4-1611.pdf],
: [http://dx.doi.org/10.1162/qjec.2008.123.4.1611 http://dx.doi.org/10.1162/qjec.2008.123.4.1611]

* [http://home.uchicago.edu/~syverson/southwestentry.pdf http://home.uchicago.edu/~syverson/southwestentry.pdf],
: [https://www.nber.org/papers/w11072.pdf https://www.nber.org/papers/w11072.pdf],
: [https://academic.oup.com/qje/article/123/4/1611/1933206 https://academic.oup.com/qje/article/123/4/1611/1933206],
: [http://academic.oup.com/qje/article-abstract/123/4/1611/1933206 http://academic.oup.com/qje/article-abstract/123/4/1611/1933206],
: [http://economics.yale.edu/sites/default/files/files/Workshops-Seminars/Industrial-Organization/goolsbee-040930.pdf http://economics.yale.edu/sites/default/files/files/Workshops-Seminars/Industrial-Organization/goolsbee-040930.pdf],
: [http://www.nber.org/papers/w11072.pdf http://www.nber.org/papers/w11072.pdf],
: [http://qje.oxfordjournals.org/content/123/4/1611.full.pdf http://qje.oxfordjournals.org/content/123/4/1611.full.pdf],
: [https://www.ssrn.com/abstract=653003 https://www.ssrn.com/abstract=653003],
: [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=653003 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=653003],
: [https://ideas.repec.org/p/net/wpaper/0404.html https://ideas.repec.org/p/net/wpaper/0404.html],
: [https://EconPapers.repec.org/RePEc:oup:qjecon:v:123:y:2008:i:4:p:1611-1633. https://EconPapers.repec.org/RePEc:oup:qjecon:v:123:y:2008:i:4:p:1611-1633.],
: [http://public.econ.duke.edu/~staff/wrkshop_papers/2005_Spring/Syverson.pdf http://public.econ.duke.edu/~staff/wrkshop_papers/2005_Spring/Syverson.pdf],
: [http://faculty.chicagobooth.edu/austan.goolsbee/research/sw.pdf http://faculty.chicagobooth.edu/austan.goolsbee/research/sw.pdf],
: [https://www.cabdirect.org/cabdirect/abstract/20093261162 https://www.cabdirect.org/cabdirect/abstract/20093261162],
: [https://www.cabdirect.org/abstracts/20093261162.html https://www.cabdirect.org/abstracts/20093261162.html],
: [https://www.econ.duke.edu/~staff/wrkshop_papers/2005_Spring/Syverson.pdf https://www.econ.duke.edu/~staff/wrkshop_papers/2005_Spring/Syverson.pdf],
: [http://leea.recherche.enac.fr/Steve%20Lawford/airline_papers/goolsbee_syverson06.pdf http://leea.recherche.enac.fr/Steve%20Lawford/airline_papers/goolsbee_syverson06.pdf],
: [http://m.nber.org/papers/w11072 http://m.nber.org/papers/w11072],
: [https://sociorepec.org/publication.xml?h=repec:net:wpaper:0404&l=en https://sociorepec.org/publication.xml?h=repec:net:wpaper:0404&l=en],
: [https://academic.microsoft.com/#/detail/2098545728 https://academic.microsoft.com/#/detail/2098545728]

DOIS: 10.3386/w11072 10.1162/qjec.2008.123.4.1611

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Goolsbee Syverson 2008a - Revision history

Scipediacontent: Scipediacontent moved page Draft Content 392582963 to Goolsbee Syverson 2008a

Scipediacontent: Created page with " == Abstract == This paper examines how incumbents respond to the threat of entry of competitors, as distinguished from their response to competitors’ actual entry. It uses..."