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Appendix to “Cost pass-through in Commercial Aviation: Theory and Evidence” – Theoretical Derivations

Gayle, Philip and Lin, Ying (2020): Appendix to “Cost pass-through in Commercial Aviation: Theory and Evidence” – Theoretical Derivations. Forthcoming in: Economic Inquiry

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Abstract

This appendix serves as a supplement to “Cost Pass-through in Commercial Aviation: Theory and Evidence.” In this appendix we present the computational details of the theoretical model as well as the model predictions described in the text of the above-mentioned paper. Using a model of air travel demand and supply for an origin-destination market, we derive the closed-form expression for Nash equilibrium airfares, and use the closed-form expression to perform a series of comparative statics exercises. In particular, crucial expressions for obtaining predictions in Table 1 and Table 2 in the paper (Gayle and Lin, 2020) are provided.

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  • Appendix to “Cost pass-through in Commercial Aviation: Theory and Evidence” – Theoretical Derivations. (deposited 22 Jul 2020 07:11) [Currently Displayed]
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