Inter-Modal Competition in the Brazilian

2008

This paper presents an analysis of inter-modal competition in Brazil by making use of a reduced-form model of coach operators' pricing decisions in the interstate travel market. Interstate travel service is heavily provided by coaches, and the system is fully operated by the private sector under public delegation, through permits and authorizations. Agencybased regulation was introduced in 2002 and this new regulatory framework may stimulate competition in the market; particularly relevant in the new institutional design is the price cap regime that aims at enhancing the flexibility to change fares in response to demand and cost conditions. By analysing pricing decisions of coach operators in some cities within the country, we studied the sensitivity of coach fares to cost components and to air travel fares and therefore investigated whether there is competition with airlines after the regulatory reform. Inter-modal interaction among coach operators and airlines is found to be significant and probably due to the competition for a small set of premium, qualitysensitive, coach passengers. ♣ Escola Superior de Propaganda e Marketing (ESPM) and Fundação Getúlio Vargas (FGV) -Brazil.

SSRN Electronic Journal, 2000

This paper presents an analysis of inter-modal competition in Brazil by making use of a reduced-form model of coach operators' pricing decisions in the interstate travel market. Interstate travel service is heavily provided by coaches, and the system is fully operated by the private sector under public delegation, through permits and authorizations. Agencybased regulation was introduced in 2002 and this new regulatory framework may stimulate competition in the market; particularly relevant in the new institutional design is the price cap regime that aims at enhancing the flexibility to change fares in response to demand and cost conditions. By analysing pricing decisions of coach operators in some cities within the country, we studied the sensitivity of coach fares to cost components and to air travel fares and therefore investigated whether there is competition with airlines after the regulatory reform. Inter-modal interaction among coach operators and airlines is found to be significant and probably due to the competition for a small set of premium, qualitysensitive, coach passengers. ♣ Escola Superior de Propaganda e Marketing (ESPM) and Fundação Getúlio Vargas (FGV) -Brazil.

2012

This paper explores airline pricing behaviour dealing with two issues. The …rst is to measure the extent to which intramodal competition in ‡uences fares charged to travellers. The second is to shed light on fares'intertemporal pro…le to verify if airlines undertake intertemporal price discrimination (IPD) strategies and whether IPD is of monopolistic-type or competitive-type. Di¤erently from past contributions, we study airline pricing behaviour removing the in ‡uence of intermodal competition. To this scope, we focus on the southern Italian market since it is less accessible by other modes and thus, air transport-related competition prevails. Our results claim that when the intramodal competition reduces, airlines apply higher fares as they exploit the greater market power arising from more concentrated market structure. Further, we …nd evidence that airlines do undertake IPD strategies -the intertemporal pro…le of fares follows a J-curve -but that they do so in more competitive markets. for useful comments and insights on earlier versions. The authors would also like to thank participants at 39th EARIE Conference, 14th SIET Conference, RCEA Workshop on "The economics and management of leisure, travel and tourism" and 32th AISRe Conference for very helpful comments and suggestions. All remaining errors are ours.

Tourism Economics

In the travel industry high-speed trains and airlines are increasingly competing for passengers, and the diffusion of price optimization based on real time demand fluctuations poses new challenges in the analysis of price competition between operators. This paper presents an analysis on how different competitors simultaneously adjust their prices in the short-run. The empirical model accounts for dynamic price variations, exploring both intramodal and intermodal price competition. The results, based on 12.506 price observations, show that intermodal competition presents some kind of asymmetric behavior, with airlines reacting more than trains to competitors' price changes. The paper concludes with the implications of this heterogeneous behavior for tourism and travel industries.

2003

This paper aims at developing a competition model for a relevant subset of the Brazilian airline industry: the air shuttle market on the route Rio de Janeiro -São Paulo, a pioneer service created in 1959. The competition model presented here contains elements of both vertical product differentiation and representative consumer. I also use the conduct parameter approach to infer about the behaviour of airlines in the market under three situations: a quasideregulation process (from 1998 on), two price war events (1998 and 2001), and a shock in costs due to currency devaluation (1999). Results permitted making inference on the impacts of liberalisation on competition and investigating an alleged collusive behaviour of 1999.

2003

This paper aims at assessing the impacts of recent economic liberalisation on an important subset of the Brazilian airline industry: the air shuttle market on the route Rio de Janeiro -São Paulo, a pioneer service created in 1959. In order to estimate structural relationships of the competition model, a product differentiated setting with conduct parameter was designed.

2008

This paper develops a model of post-liberalisation price competition on the route Rio de Janeiro -São Paulo that culminated in the rupture of a thirty-nine year-old cooperative structure -the air shuttle service cartel. By modelling and calibrating a two-stage Stackelberg game with incomplete information it intends to contribute to the investigation of price war rationality in the airline industry. ♣ PhD student. Institute for Transport Studies -University of Leeds. 1 Values in current 1998 prices in local currency, which means a fare equivalent to U$ 80. The travel time is about 45 minutes and the distance between the cities is 365 km. 2 Weights were determined using the number of seats offered on the occasion. Values were constructed using available data on frequencies and airplane average number of seats (Clemente, 1999).

SSRN Electronic Journal, 2000

This paper estimates a model of airline competition for the Spanish air transport market. I test the explanatory power of alternative oligopoly models with capacity constraints. In addition, I analyse the degree of density economies. Results show that Spanish airlines conduct follows a price-leadership scheme so that it is less competitive than the Cournot solution. I also find evidence that thin routes can be considered as natural monopolies.