| Author: | Neven, D. J. Röller, L-H. |
| Title: | Rent sharing in the European airline industry |
| Journal: | European Economic Review
1996 : APR, VOL. 40:3-5, p. 933-940 |
| Index terms: | AIRLINES COMPETITION RENTS PAY MARKETS |
| Language: | eng |
| Abstract: | Price-cost margins offer a poor guide to the evaluation of market power in the context of product market competition and managerial incentives to control costs. The paper presents a method to evaluate simultaneously both market power and its pass through on cost. The structural model is estimated using data for eight European airlines from 1976 to 1990. The paper finds a strong support for the hypothesis that lax competition induces extensive rent sharing through excessive wages. |
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