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Π Π 1 = = 1 1 1 1 1 ( A q γ q ) q α θ q q 1 1 1 1 ( A q γ q ) q α b θ q q mc ( α >, 0 < 1) 1 = α θ1q1 1 θ1 < ( α b) θ Q ( < θ < α b, < < α mc = 0 0 b ) γ b θ < θ < θ 1 0 < γ < γ1 1 0 1 < γ = 1 1 0 * < γ ( = γ ) 1 < θ = 0. 0. * < θ ( = θ ) 1 1 γ θ 1 b 0 < b < α A > α 1* q = Y X * q = X Z 1 q 1 q q q 4

X * * ( +θ ) + 5 = 9 γ Z ( A ) b Y = 4 α + 5 * * * ( A α )( θ + γ ) + ( + θ ) = b X < 0 Z < 0 Y 0 1* p b 1* p * θ = 5 = * ( 9 + 5γ ) Y 0 X * * p 4 γ Y = 0 * θ X * * ( 1+ θ ) < 0 ( * * p 5 + ) θ γ = < 0 X b X θ < 1 θ 1 < 0 < θ < θ1 1 5

( ) 0 1 5 * * 1* + = X Y p θ γ ( ) 0 4 * * * + = X Y p θ γ [ ] FD Dst HI SPL DLCR DLCC FD CD FD q f p k k, ) (, ) ( ˆ, ) ( ˆ, ) ( ˆ, ) (, * ˆ ) (, * ˆ ) ( ˆ + + + = [ ] r k k INC POP p p f Dst q ) (, ) (, ˆ ) (, ˆ ) ( ˆ + + + = k qˆ k k pˆ k r pˆ POP INC : ˆ D C C Dˆ FD 6

k qˆ CD ˆ DLC ˆ FD C DLCR ˆ DLC ˆ DLC ˆ C R HI Dst SPL 7

CD q 8

8 Schmalensee Mason et al. 90 1 j j, p φ ( 0 <φ <1) j pt t 1 γ 9

j* p t 1996000 =1 j t j* j ( pt pt ) + et uj p p + j t 1 = φ 1 j p t j pt 1 [( φ ) + λ ] p j 1 j 1FD j 1 t 1 j 1 λ j 1 FD j 1 m m 10

( m A φ = 1 1 ) ( ) ( ) φ = 1 1 Ln A Ln m (1) () (3) () 11

1

13

Ar Carrer Fnancal Reports,Form 41 Fnancal Data egonal R A ccounts Data, Bureau of Economc Analyss. 14

15

16

1 φ m 17

003.7.16 653 Brander, J. A., and A. Zhang (1990), Market conduct n the arlne ndustry: An emprcal nvestgaton, RAND Journal of Economcs Vol.1 No.4, pp.567-83. Brander, J. A., and A. Zhang (1993), Dynamc olgopoly behavour n the arlne ndustry, Internatonal Journal of Industral Organzaton 11, pp.407-35. Bresnahan, T. F. and P. C. Ress (1990), Entry n monopoly markets, Revew of Economc Studes 57, pp.531-53. Bresnahan, T. F., and P. C. Ress (1991), Entry and competton n concentrated markets, Journal of Poltcal Economy Vol.99, No.5, pp.977-1009. Caves, D. W., L. R. Chstensen, and M. W. Tretheway (1984), Economes of densty v ersus economes of scale: Why trunk and local servce arlne costs dffer, RAND Journal of Economcs Vol.15 No.4, pp.471-89. Dresner, M., J. S. C. Ln, and R. Wndle (1996), The mpact of low-cost carrers on arport and route competton, Journal of Transport Economcs and Polcy Vol.30, No.3, pp.309-8. Dresner, M., and M.W. Tretheway (199), Modellng and testng the effect of market structure on prce, Journal of Transport Economcs and Polcy Vol.6, No., pp.171-84. Gllen D. W., T. H. Oum and M. W. Tretheway (1990), Arlne cost structure and polcy mplcatons: A mult-product approach for Canadan Arlnes, Journal of 18

Transport Economcs and Polcy Vol.4 No.1, pp.9-33. Joskow, A. S., G. J. Werden, and R. L. Johnson (1994), Entry, ext, and performance n arlne markets, Internatonal Journal of Industral Organzaton Vol.1, No.4, pp.457-71. Klemperer, P. D. (1988), Welfare effects of entry nto markets wth swtchng costs, Journal of Industral Economcs Vol.37, No., pp.159-65. Leberman, M. B. (1987), Excess capacty as a barrer to entry: an emprcal apprasal, Journal of Industral Economcs Vol.XXXV, pp.607-7. Mankw, N. G. and M. D. Whnston (1986), Free entry and socal neffcency, RAND Journal of Economcs Vol.17, No.1, pp.48-58. Mason, C.F., O.R. Phllps, C. Nowell (199), "Duopoly behavor n asymmetrc markets: An expermental evaluaton", The Revew of Economcs and Statstcs, Vol.LXXIV, pp.66-70. Mlls, D. E. (1991), Untmely entry, Journal of Industral Economcs Vol.39, No.6, pp.659-70. Morrson, S. A. (001), Actual, adjacent, and potental competton: Estmatng the full effect of Southwest Arlnes, Journal of Transport Economcs and Polcy Vol.35, No., pp.39-56. Morrson, S. A. and C. Wnston (1987), Emprcal mplcatons and tests of the contestablty hypothess, Journal of Law and Economcs Vol. XXX, pp.53-65. Morrson, S. A. and C. Wnston (1995), The evoluton of the arlne ndustry, Brookngs Insttuton. Nachbar, J. H., and B. C. Petersen, and I. Hwang (1998), Sunk costs, accommodaton, and the welfare effects of entry, Journal of Industral Economcs Vol. XLVI, pp. 19

317-3. Oum, T. H., W.G. Waters II, and J. S. Yong (199), Concept of prce elastctes of transport demand and recent emprcal estmates: An nterpretatve survey, Journal of Transport Economcs and Polcy Vol.34, No., pp.139-54. Park, J. H. (1997), The effect of arlne allance on markets and economc welfare, Transportaton Research Part E Vol.33, No.3, pp.181-95. Perry, M. K. (1984), Scale economy, mperfect competton, and publc polcy, Journal of Industral Economcs Vol.31, No.3, pp.313-33. Schmalensee, R. (1987), "Compettve advantage and collusve optma," Internatonal Journal of Industral Organzaton 5, pp.351-67. Trole, J. (1988), The theory of ndustral organzaton, MIT Press, Chapter 8. Wezsacker, C. C. (1980), A welfare analyss of barrer to entry, Bell Journal of Economcs Vol.11, No., pp.399-40. Wndle, R., and M. Dresner (1999), Compettve responses to low cost carrer entry, Transportaton Research Part E Vol.35, No.1, pp.59-75. Zhang, A. (1996), An analyss of fortress hubs n arlne networks, Journal of Transport Economcs and Polcy Vol. 30 No.3, pp.93-307. (00) 149-58 0

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