Can low cost carriers deter or accommodate entry?

• Type: Article in International Scientific Journal
• Date: 2008

Authors

Cristina Barbot (Author) FEP

Journal

Title: Transportation Research Part E: Logistics and Transportation Review

Vol. 44 No. 5

Pages: 883-893

ISSN: 1366-5545

Publisher: Elsevier

Indexing

ISI Web of Science

Econlit

Scientific classification

FOS: Social sciences > Other social sciences

Other information

DOI: 10.1016/j.tre.2007.07.010

Abstract (EN): This paper analyses entry deterrence and accommodation by low cost carriers (LCCs) with two games. In the first game two LCCs compete in a horizontal differentiation setting. Results show that the entrant may drive away the incumbent from its original location under certain conditions. In the second game the incumbent is a LCC and the entrant a full service carrier, with vertical differentiation. The incumbent tries to deter or accommodate entry by product proliferation. We find out that the incumbent will only deter entry if it can surpass the entrant¿s quality, and that product proliferation is not an accommodating strategy.

Language: Portuguese

Type (Professor's evaluation): Scientific