Abstract: The purpose of this study is to analyze the domestic air transport industry in Spain. This work has focused on the segment of business and we present a theoretical model of oligopolistic competition which could be empirically tested through three equations: demand, market structure and price. We contribute to develop creativity and innovation with the elaboration of a data studying 113 over 96 fortnight periods (2011-2015) where analyses how clients react to both strategic changes carried out by airlines (frequencies, capacity, prices) and changes in socio-economic factors. The analysis is performed by applying the econometric technique of instrumental variables. We find that that frequency competition -Cournot- is more important than competition in prices -Bertrand-.

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