Price wars and price collusion in China's airline markets
Article
Article Title | Price wars and price collusion in China's airline markets |
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ERA Journal ID | 3759 |
Article Category | Article |
Authors | Zhang, Yahua (Author) and Round, David K. (Author) |
Journal Title | International Journal of Industrial Organization |
Journal Citation | 29 (4), pp. 361-372 |
Number of Pages | 12 |
Year | 2011 |
Place of Publication | Amsterdam, Netherlands |
ISSN | 0167-7187 |
Digital Object Identifier (DOI) | https://doi.org/10.1016/j.ijindorg.2010.07.005 |
Web Address (URL) | http://www.sciencedirect.com/science/article/pii/S0167718710001001 |
Abstract | In the absence of an effective antitrust law, both fare wars and price collusion have been pervasive in China’s airline markets, causing concern for both airlines and consumers. A study of monthly airfare data from 2002 to 2004 confirms that fare wars occur periodically, as well as price collusion. Both tend to be short-lived. The fact that collusion is more likely to occur in January and April when demand is high, as revealed by China Eastern’s and China Southern’s price-war and collusion models, has been confirmed by interview information obtained from the airlines’ sales managers. However, there is also evidence in these models suggesting that collusion can be more easily formed when demand is low. High airport concentration measured by the HHI may facilitate collusion in certain circumstances, but it may also lead to more price wars under other conditions. Concentration in both airports and routes does not appear to systematically affect the occurrence of fare wars and collusion in all the models estimated. We also reject the possibility that mutual forbearance due to multimarket contact plays any important anti-competitive role in China’s airline markets. |
Keywords | price wars; collusion; airline market; China; restrictive trade practices |
ANZSRC Field of Research 2020 | 350610. Pricing (incl. consumer value estimation) |
500102. Business ethics | |
380109. Industry economics and industrial organisation | |
Public Notes | File reproduced in accordance with the copyright policy of the publisher/author. |
Byline Affiliations | School of Accounting, Economics and Finance |
University of South Australia | |
Institution of Origin | University of Southern Queensland |
https://research.usq.edu.au/item/q0vw4/price-wars-and-price-collusion-in-china-s-airline-markets
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