Research Presentation Title

Does the Southwest Effect Still Exist?

Major

Economics

Chris Clark

Abstract

A phrase coined by the US DOT, the Southwest Effect is a combination of dramatic increased supply and decreased prices after Southwest enters in a new market. However, after many years of increased airline competition and a more saturated industry, consumers are not seeing such results. Using a difference-in-difference model, I am utilizing the natural experiment that Southwest creates when it enters into new markets to determine if the Southwest Effect still exists. I expect to find that the Southwest Effect is still very prominent in new markets.

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Does the Southwest Effect Still Exist?

A phrase coined by the US DOT, the Southwest Effect is a combination of dramatic increased supply and decreased prices after Southwest enters in a new market. However, after many years of increased airline competition and a more saturated industry, consumers are not seeing such results. Using a difference-in-difference model, I am utilizing the natural experiment that Southwest creates when it enters into new markets to determine if the Southwest Effect still exists. I expect to find that the Southwest Effect is still very prominent in new markets.