Entry and Exit in a Liberalised Market

We analyze the entry and exit activity in the UK airline markets in the post-liberalisation period and study the di¤erential traits between tra-ditional and low cost carriers. Alongside with the characteristics tradition-ally highlighted as determinants of entry (e.g., airport presence and network economies), we …nd that the existence of charter or seasonal operators, prod-uct di¤erentiation opportunities and the level of quality provided by the in-cumbents are also relevant in explaining entry and/or exit. Despite the liber-alisation policies, the contestability of important large markets still seems to be limited. J.E.L. Classi…cations: L11, L9