We provide an econometric framework for estimating a game of simultaneous entry and pricing decisions while allowing for correlations between unobserved cost and demand shocks. We use our framework to account for selection in the pricing stage. We estimate the model using data from the US airline industry and find that not accounting for endogenous entry leads to biased estimation of demand elasticities. We simulate a merger between American and US Airways and find that product repositioning and postmerger outcomes depend on how we model the characteristics of the merged firm as a function of the premerger firms’ characteristics.

中文翻译：

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航空市场的市场结构和竞争

我们提供了一个计量经济学框架，用于估计同时进入和定价决策的博弈，同时考虑到未观察到的成本和需求冲击之间的相关性。我们使用我们的框架来解释定价阶段的选择。我们使用美国航空业的数据估计模型，发现不考虑内生进入会导致对需求弹性的估计有偏差。我们模拟了美国航空公司和全美航空公司之间的合并，发现产品重新定位和合并后的结果取决于我们如何将合并公司的特征建模为合并前公司特征的函数。