This paper investigates strategic interaction among airlines in product-quality choices. Using an instrumental variables approach, the paper estimates flight-frequency reaction functions, which relate an airline׳s frequency on a route to its own characteristics and to the frequencies of competing airlines. A positive reaction function slope is found in some cases, suggesting the presence of strategic interaction in the choice of frequencies.
Focusing on a main element of quality, flight frequency, the paper has estimated reaction functions in a search for strategic interaction in the determination of frequencies. Regressions including a multimarket-contact variable show no evidence of mutual forbearance in frequency competition within carrier types.
Collected and summarized from the source below by Minh Pham https://db.vista.gov.vn:2095/science/article/pii/S2212012214000240