留學生經濟方向essay寫作：Data Description

 

This paper mainly research the effect of airline merger in duopoly model to flight frequency and consumer welfare, we take the United Airlines, Inc (Listed in NASDAQ: UAUA)merger Continental Airlines, Inc(Listed in NYSE : CAL) as a sample, and research the effect these merger to the flight frequency and consumer welfare, We have monthly passenger, frequency, and cost data from the Databank, maintained by the U.S. Department of Transportation, reports the monthly number of nonstop flights and passengers per market and per major airline. The Aircraft Operating Costs and Statistics, from AVMARK Inc., provide network-wide operating costs per type of jet aircraft and per major airline. These data mainly collect from the report of United Airlines, Inc (Listed in NASDAQ: UAUA)merger Continental Airlines, Inc(Listed in NYSE : CAL), some data will collect from Bloomberg data 

 

Estimation Results

4.1 Descriptive statistical analysis

Based on the data of United Airlines, Inc and Continental Airlines, Inc, we make descriptive statistical analysis of every variable, the result as follow:  

 

Table 1 the descriptive statistical analysis of every variable of UAUA

N Min Max Mean S S2

tpq 12 9695.000 12104.000 10734.00000 822.838988 677064.000

ff 12 6728.00 70301.00 37841.4167 21728.81999 472141618.265

cost 12 927.83 2369.18 1742.1092 408.84946 167157.881

mile12 606.00 2044.00 1289.6667 405.14225 164140.242

casm 12 .270 .800 .56750 .211837 .045

fuel 12 270.88 885.35 629.1650 203.55998 41436.666

hub 12 .151 .845 .51933 .235121 .055

pop 12 12932485.00 93038955.00 57016314.0833 26139924.32709 683295643825754.000

month 12 17353.00 23720.00 20453.5000 2303.03099 5303951.727

inc 12 29414.00 47819.00 39485.6667 6849.85313 46920487.879

pq 12 86.00673.00 356.0833 209.28513 43800.265

Effective N (list)

12

 

Note: the total passenger quantity represents the consumer benefit.

Table 1 is the descriptive statistical analysis of every variable of UAUA. The average of operating cost is 1742.1092$, the mean of the operating cost per available seat-mile is 0.56750. the average of fuel cost is 629.1650$, the average of population of the George Bush Intercontinental Airport in the market is 57016314.0833, the mean of the median household income at the non metropolitan area in the market as the others are parameters.is 39485.6667$. The average of passenger quantility is 356, while the average of flight frequency is 37841, and the mean of total passenger quantility is 10734.

 

Table 1 the descriptive statistical analysis of every variable of CAL

N Min Max Mean S S2

tpq 12 9638.000 12024.000 10798.16667 881.222687 776553.424

ff 12 2458.000 53510.000 27499.25000 17602.713319 309855516.205

cost 12 999.05 2252.19 1539.0625 406.13342 #p#分頁標題#e#164944.352

mile 12 353.000 2104.000 1495.25000 640.342824 410038.932

casm 12 .020 .092 .04798 .026064 .001

fuel 12 311.090 857.050 573.32583 176.581634 31181.073

hub 12 .080 .942 .45133 .283038 .080

pop 12 20978207.000 85280893.000 54138604.58333 22546492.762313 508344335881045.000

month 12 17570.000 23526.000 21062.58333 2062.784193 4255078.629

inc 12 33753.00 52505.00 39653.0000 5964.82401 35579125.455

pq 12 90.00 579.00 334.8333 183.18189 33555.606

Effective N (list)

12

Note: the total passenger quantity represents the consumer benefit.

 

Table 2 is the descriptive statistical analysis of every variable of CAL. The average of operating cost is1539.0625$, the mean of the operating cost per available seat-mile is .04798. the average of fuel cost is573.32583$, the average of population of the George Bush Intercontinental Airport in the market is 54138604.58333, the mean of the median household income at the non metropolitan area in the market as the others are parameters.is39653$. The average of passenger quantility is 335, while the average of flight frequency is 37841, and the mean of total passenger quantility is 10798.

 

Empirical analysis

Based on the above model, we will use SPSS and Eviews soft to egression the factors of airport merger, particularly for monopoly model. The FOC for flight frequency as follow:

 

The FOC for passenger quantity as follow:

 

We have model heteroskedasticity test and endogenity test.table 3 and 4 are the result of  endogenity test of flight frequence and consumer welfare model.

 

Table 3 endogenity test of consumer welfare

 

Table 4 endogenity test of flight frequence

 

Above the tables, E respects resid, we found that the coefficient of E in two tables are infinitely close to 0, so we can know the model pass endogenity test.

 

We have heteroskedasticity test of models. We will use the White test to do this. Table 5 and 6 are the rusult of heteroskedasticity test of models.

 

Table 5 heteroskedasticity test of consumer welfare

 

Table 6 heteroskedasticity test of flight frequence

 

In the same variance assumption, the product of the square of the auxiliary equation of OLS residuals sequence the resulting coefficient and sample size, asymptotic degrees of freedom for the auxiliary regression equation to the distribution of the number of variables.

According to this , we found that in the result of heteroskedasticity test of consumer welfare , LM=nR2=7.55658<X20.05=7.9812; and in the result  of heteroskedasticity test of flight frequence, LM=nR2=6.2558<X20.05=8.43676, So there is no heteroscedasticity of two models.#p#分頁標題#e#

 

We use original least squares method to regression the model, table 7 and 8 are the result of regression.In this paper, we use the passenger quantity represents the consumer utility, from the table 7, we found that the elasticity of   , , , , ,is positive is positive, that is to say when    , , , ,  increase 1%, passenger quantity will also increase, so the consumer utility will increase.

 

Table 7: the result of regression of consumer welfare 

 

Table 7: the result of regression of Flight frequence 

 

Table 8 is the result of regression, when the dependent variable is flight frequency. When it is UAUA, the R-squared is 0.82, the model is suitable. All of the P value are lower than 0.1, that is to say, they are significant.The coefficient of  , , is positive, that is to say the relationship between flight frequency and mile, operation cost and fule cost is positive, while the coefficient of    and   are negative, that is to say the higher   and  , the more lower flight frequency. While for the CAL, the coefficient is also similar to the UAUA, but coefficient of  ,  and  are lower than UAUA, that is to say it is not sensitive to the mile, operation cost and fule cost compare to the CAL, while the coefficient of   and is higher than UAUA, that is to say, the CAL is more sensitive to the   and .

 

Table 5 is the different between prediction and observed results, we found that the predicted of the model is close to the observed not only when it is passenger quantity, but also the flight frequency, that is to say the above model is suiatble, these factors are really effect the flight frequency and passenger quantity.

 

able 5: The prediction and observed results

　Passenger quantity flight frequency　

　 Observed Predicted Observed Predicted

Mean 17802 17526 193 181

Std Error 15703 15026 127 114

Min 2163 1952 63 49

Max 72852 69476 724 703

 

After regression the effect to the passenger quantity and flight frequency, then we quantify the effect of merger to the passenger quantity and flight frequency, we assume that two airline in a city. The FOC are 

  

We will regression the model in the Duopoly and Monopoly, then compare the predictions of the Flight frequency and Total passenger quantity when they are in Duopoly and Monopoly. When it is Duopoly, the Square root of flight frequency is 13.97, while when it is Monopoly, the value is 14.6, the different between Duopoly and Monopoly is 0.63, the Flight frequency is 18, that is to say, the monopoly can increase the flight frequency, so the merger can increase the flight frequency, when we use the ratio of Monopoly to Duopoly for flight frequency, the results is similar. 

 

When it is Duopoly, the total passsenger quantity is 34285, while the value is 30761 when it it Monopoly, the total passsenger quantity in Monopoly will lower in Duopoly. That is to say the merger may decrease the consumer benefit, when we use the Ratio of Monopoly to Duopoly for total passsenger quantity, the result is also similar.

 

Compare to the predictions when market is Duopoly and Monopoly

Duopoly Monopoly Difference Ratio of Monopoly 

to Duopoly

Square root of 

flight frequency 13.97 14.6 0.63 1.05

Flight frequency 195 213 18 1.1

Total passenger quantity 34285 30761 -3524 0.9

Consumer surplus　 　 　 0.9

 

In summary, when United Airlines, Inc merger Continental Airlines, Inc, it will increase the flight frequency. And decrease the total passenger quantity, that is to say the consumer utility will increase.