Product Unbundling in the Travel Industry: The Economics of Airline Bag Fees

This paper provides theory and evidence on airline bag fees, offering insights into a real‐world case of product unbundling. The theory predicts that an airline's fares should fall when it introduces a bag fee, but that the full‐trip price (the bag fee plus the new fare) could either rise or fall. The empirical evidence presented in the paper provides strong confirmation of the first prediction. The data also suggest that the average fare falls by less than the bag fee itself so that the full price of a trip rises for passengers who choose to check bags.     

Rural Population Growth, 1950–1990: The Roles of Human Capital, Industry Structure, and Government Policy

Human capital raises rural incomes, but this effect is swamped by higher returns to human capital in urban markets. This leads to "brain drain" from rural areas. Populations grow more rapidly in rural counties that have a diversified employment base. Farm population grows faster (or declines more slowly) in counties with relatively high farm income, and nonfarm populations grow faster in counties with relatively high nonfarm income. However, higher farm incomes lead to slower nonfarm population growth and vice versa. Rural county government services financed by local taxes or debt have neutral or negative effects on population growth.     

City-Pairs Versus Airport-Pairs: A Market-Definition Methodology for the Airline Industry

This paper provides a methodology for deciding which airports warrant grouping in multi-airport metropolitan areas. The methodology is based on the comparability of incremental competition effects from nearby airports on average fares at a metropolitan area’s primary airport. Results from a quarterly panel data set for the period 2003–2009 provide strong evidence that city-pairs, rather than airport-pairs, are the appropriate market definition for analyses of passenger air transportation involving many (but not all) large metropolitan areas. Based on the proposed method, we offer a recommended list of airports that should be grouped when creating city-pairs for the analysis of competition in the US domestic airline industry.     

Handle with care: Avoiding and managing retaliation claims

Anti-retaliation protections for whistleblowers are routinely included in federal statutes. During the past decade, claims of retaliation in employment-related cases have grown in numbers and in reach, due in part to a seemingly far-reaching commitment by the U.S. Supreme Court to interpret anti-retaliation provisions to provide maximum protection to complainants. Employers must take care not to run afoul of the anti-retaliation provisions; however, that does not mean that employees who complain of discrimination are ‘untouchable.’ This article provides an overview of anti-retaliation law as it relates to the employer–employee relationship and outlines eight practical tips for managing and avoiding retaliation claims. Though anti-retaliation provisions provide ample reason for employers to proceed with caution in the face of employee complaints, employers need not succumb to paralyzing litigation fear when addressing concerns regarding complaining employees’ performance issues.     

Trust and outsourcing: Do perceptions of trust influence the retention of outsourcing providers in the hospitality industry?

The global trend toward outsourcing necessitates unprecedented symbiosis between client-based organizations—purchasers of these services—and their multiple suppliers. Building on existing empirical work that suggests that the level of trust that exists between a purchaser and a supplier is fundamental in determining the strength of such a dyadic relationship, we examine how an organization's outsourcing efforts can be influenced by trust, and how perceptions of trust influence buyer retention of outsourcing providers. The resulting causal model suggests that communication, benevolence, and trust are vital to developing and maintaining productive, enduring relationships between purchasers and suppliers.     

Central Mandates and Local Incentives: The Colombia Education Voucher Program

In decentralized education systems programs that promote centralmandates may have to be devolved to local governments, communities,and providers. When participation by local governments and providersis voluntary rather than compulsory, the determinants of programplacement are important in predicting potential benefits toindividuals. This article analyzes incentives for municipalitiesand private schools to participate in Colombia's voucher program.It finds that the demand for secondary education relative tothe capacity of public schools and the availability of spacesin private schools in the municipality were key predictors ofmunicipal participation, whereas the number of underserved studentshad a nonlinear effect on participation. Schools whose educationalquality was moderate and charged moderate tuition fees werethe most likely to participate; the program was less attractiveto schools whose quality and fees were high and to schools whosequality and fees were low.     

The Impact of Perceived Leader Integrity on Subordinates in a Work Team Environment

Over the last decade, the increased use of work teams within organizations has been one of the most influential and far-reaching trends to shape the business world. At the same time, corporations have continued to struggle with increased unethical employee behavior. Very little research has been conducted that specifically examines the developmental aspects of employee ethical decision-making in a team environment. This study examines the impact of a team leader’s perceived integrity on his or her subordinates’ behavior. The results, which came from a survey of 245 MBA students functioning for 2 years in a work team environment, indicate an interaction between leader integrity and team member ethical intentions.     

The Impact of Passenger Mix on Reported “Hub Premiums” in the U.S. Airline Industry

This paper analyzes U.S. airline price and passenger data disaggregated at the fare class level for the year 2000. We find that although average prices to and from most airlines' hubs tend to be higher than those throughout the remainder of their systems, much of the difference can be explained by passenger mix (i.e., the proportion of leisure versus business passengers). Our results suggest, therefore, that many of the reported “hub premiums” in the previous literature may be overstated.