Chinese Airline industry is in the process of marketization. After nearly twenty years of deregulation in Chinese airline industry, not only the government but also the investors and consumers show great concern for the present market structure of Chinese airline industry. This paper initiates a theoretical model for airline market structure, combining with Chinese airline industry data to study the equilibrium quantity and air fares. We find that the market quantity is increasing while the air fares are decreasing. In addition, the market concentration is decreasing. Hence, the present industry structure of Chinese airline is not monopoly and the market is becoming more and more competitive.
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