If I wish to understand the competitive constraints of airline A on airline B, what sort of econometric relationship should I investigate ?. Immediately what comes to mind is to look at the impact of changes in B's fares on A's demand after controlling for factors such as market structure, nature of demand, cost etc across common routes. However, I recently saw a study that tries to approach this by looking at the impact of the entry of airline A on the fares of B. Which method is right ?.
Should I also look at whether the airlines indulge primarily in price or quantity competition when looking at this ?.
