Open Collections

Essays in estimating air transport demand processes and the formation of oligopolies

University of British Columbia

This dissertation studies three different topics in estimating air transport demand processes and the formation of oligopolies. Chapter 1 provides an overview of the thesis. Chapter 2 investigates the sensitivity of demand for air travel by singleton passengers, couples, and families. It examines how the demand for air travel by these groups is potentially different. In this study, a compound Poisson structure of the demand of different passenger groups is considered and aggregate demand observations and decompounding techniques are used to estimate demand sensitivity of each group of customers to price, time, season, and the economic cycle. The methodology is applied to Canadian market data and the results indicate there are significant differences among the different groups of customers. In Chapter 3 a new decompounding procedure based on rudimentary number theory is developed. The advantages and disadvantages of this new framework are discussed, and the efficiency of these methodologies for certain class of problems is demonstrated. The framework is capable of decompounding when group sizes are either pairwise co-prime or composed of two elements. Under some conditions, the methodologies are generalized to cases where data are recorded in non-equal intervals. It is also not dependent on a restrictive assumption of having some zero observations that exists in conventional decompounding algorithms such as the Panjer recursion algorithm. Chapter 4 shows how hierarchical decision making and franchising is used as a fine-tuned strategy for brands to both compete aggressively and softly. In a hierarchical decision making process, as a part of long-run plan, the head office of a brand first decides on how many franchises they will grant. At the second stage, the flagships or company owned divisions decide on their level of output and lastly franchises decide how much to produce. We show brands can use this strategy both as a commitment not to compete fiercely with other brands who share the same cost efficiency and to credibly threaten or possibly keep the inefficient brands out of the market. The efficient brands’ incentive to pre-empt the competition is high when either the market size is small or their cost advantage is substantial.

Text

2012-10-16

Attribution-NonCommercial-NoDerivatives 4.0 International

http://hdl.handle.net/2429/43422

Business Administration

University of British Columbia

UBCV

http://creativecommons.org/licenses/by-nc-nd/4.0/