Substitution and complementarity in aviation: airports vs airlines

In this paper a model concerning substitution and complementarity on the linkage between airport facilities and airlines from the viewpoint of pricing policy is formulated. This model is used to analyze whether airport pricing policies, e.g. to ensure cost recovery, are compatible with competition for transfer passengers. It is found that airports with a high volume of demand can pursue cost recovery and still be the most preferred hub. Airports with a low level of demand will not be the preferred hub, even if the larger airport charges higher taxes to recover costs.     

Intermodal competition in the London-Paris passenger market: High-Speed Rail and air transport

This paper studies inter- and intramodal competition in the London-Paris passenger market during the period 2003-2009. We identify the degree to and conditions under which High-Speed Rail is a viable substitute for airline travel. Using pooled cross-sectional data we estimate multinomial and mixed logit models to examine actual travel behaviour. Our model allows us to analyse the reaction of passenger behaviour on the withdrawal of aviation alternatives and the completion of the High-Speed Rail link between the two cities in November 2007. The results show that travel time and frequency are the main determinants of travel behaviour. The valuation of total travel times changes over the years following the opening of the High-Speed Rail link. Furthermore, we show that the direct elasticity of market share with respect to frequency for a number of aviation alternatives is above 1, indicating that these alternatives are not able to maximise profits. These alternatives subsequently left the market in our sample period. For the remaining aviation alternatives, except for easyJet, we find elasticities of market share with respect to frequency close to 1. Therefore, we conjecture that competition in this market will decline in the long run.     

The Political Dimension: Added Value for Cross-Cultural Analysis. Nozawa and Smits,Two CEOs and Their Public Statements

Work-related cultural differences, which were familiarized by scholars such as Hall and Hofstede, offer important concepts to help us understand various forms of cooperation and communication. However, the predominant focus of cultural analysis on collectivistic harmony prevents us from gaining an understanding of strategy and conflict. In an attempt to grasp how conflicts are handled, a political analysis can provide new insights. This is illustrated by a comparative study of two CEOs who gave public statements concerning management failure: Shouhei Nozawa of Yamaichi and Paul Smits of KPN. Their statements were strikingly different in several ways, but the classical insights of cross-cultural analysis can only partly explain the differences. This is where political analysis comes in, focusing on interest relationships, responsibilities and virtues, tactics and strategy.     

Flexibility and specialization in question; birth,growth and death rates of Cambridge new technology-based firms 1988–92

Insight into the investment behaviour of firms is central in understanding economic dynamics. A critical question, however, is whether firms provide sufficiently reliable data to enable them to make plausible forecasts at the meso (regional or sectoral) level. This paper analyses Dutch investment forecasts at different levels of aggregation. The central research question is whether entrepreneurs, individually or as a group, make systematic errors in their investment forecasts. A statistical test reveals that investment forecasts are not biased at the aggregated (regional and sectoral) level. At the micro level, however, there is a significant bias. Hence, using aggregated (regional and sectoral) data to test the lack of bias (unbiasedness) of forecasts may lead to the wrong conclusions. Moreover, aggregated investment forecasts may then be an inappropriate source for policy recommendations, despite their seemingly high reliability. This finding may in principle be valid for many European countries, since data collection on investment is organized in similar ways throughout Europe.     

Network competition in the open aviation area

In 2008 the ‘joint open aviation area’ between the US and EU will become reality. It is expected that competition will increase. The reaction of the airlines depends on the possibility to make profits in ‘new’ markets (markets that can now be entered). This, in turn, depends on network characteristics. In this paper we find that full liberalization of international markets by means of a bilateral agreement results in higher welfare than the formation of an alliance. Carriers, however, will also in fully deregulated aviation markets most likely opt for an alliance. This is a result of a built-in competitive effect of hub–spoke networks. Only in markets where the reservation price is very high (e.g. to London Heathrow), hub–spoke airlines may enter a competitive game. Low-cost airlines, which do not operate extensive hub–spoke networks, may find it profitable to enter new markets.     

Modelling the joint access mode and railway station choice

This study models the choices of Dutch railway users. We find a steeper negative distance effect on the utility of departure stations accessed by the non-motorized modes of walking and bicycle as compared to the motorized modes of car and public transport. Availability of parking places and bicycle standing areas have a positive effect on the choice of departure railway stations accessed by car and bicycle, respectively. Public transport frequency has a positive whereas travel time has a negative effect on the choice of departure stations accessed by public transport. The derived rail service quality index (RSQI), which provides a measure of rail accessibility to all other stations, has a significant and positive effect on the choice of departure stations accessed by all modes. The outcome of this paper can be used to develop a comprehensive railway accessibility indicator for neighbourhoods, for hedonic pricing studies.     

The Impact of Railway Stations on Residential and Commercial Property Value: A Meta-analysis

Railway stations function as nodes in transport networks and places in an urban environment. They have accessibility and environmental impacts, which contribute to property value. The literature on the effects of railway stations on property value is mixed in its finding in respect to the impact magnitude and direction, ranging from a negative to an insignificant or a positive impact. This paper attempts to explain the variation in the findings by meta-analytical procedures. Generally the variations are attributed to the nature of data, particular spatial characteristics, temporal effects and methodology. Railway station proximity is addressed from two spatial considerations: a local station effect measuring the effect for properties with in 1/4 mile range and a global station effect measuring the effect of coming 250 m closer to the station. We find that the effect of railway stations on commercial property value mainly takes place at short distances. Commercial properties within 1/4 mile rang are 12.2% more expensive than residential properties. Where the price gap between the railway station zone and the rest is about 4.2% for the average residence, it is about 16.4% for the average commercial property. At longer distances the effect on residential property values dominate. We find that for every 250 m a residence is located closer to a station its price is 2.3% higher than commercial properties. Commuter railway stations have a consistently higher positive impact on the property value compared to light and heavy railway/Metro stations. The inclusion of other accessibility variables (such as highways) in the models reduces the level of reported railway station impact.

Low-cost airlines and airport competition

An important question from the viewpoint of competition analysis in the air transport industry is the extent to which low-cost airlines operating from a secondary airport compete with full-service airlines serving a main airport in a multiple airport region. In this paper we address the issue of the competition between full-service and low-cost airlines serving adjacent airports in the Greater London using econometric estimation of demand structure (own- and cross-price elasticities). Our analysis follows the methodology in (Pels, E., Nijkamp, P., Rietveld, P., 2000. Airport and airline competition for passengers departing from a large metropolitan area. Journal of Urban Economics, 48 (1), 29–45, Pels, E., Nijkamp, P., Rietveld, P., 2003. Access to and competition between airports: a case study for the San Francisco Bay area. Transportation Research Part A: Policy and Practice, 37 (1), 71–83). It is based on the nested logit model which we use to capture three key dimensions of passenger choice: air fare, surface-access costs and frequency. We obtained estimates of the own- and cross-price elasticities, which was the focus of our interest. On the basis of our understanding of the industry dynamics we find these estimates, especially of the cross-price elasticities, to be on the low side.     

Boekbespreking

Amsterdam, Juli 1959.     

On the endogeneity of output in dynamic labour-demand models

This paper investigates the endogeneity of output in the context of the standard dynamic labour-demand model. Using a panel of Dutch firms, we find that the assumption of endogeneity of output cannot be rejected, so that an adjusted procedure has to be followed in which information on the output expectations of entrepreneurs is used. The estimated effect of the endogenous, current output variable on employment appears to be significantly larger than the effect of the exogenous, expected output variable. The adjustment parameter of employment is however, remarkably robust against distinct specifications for output.