Stata Output Questions (50 points) In this set of questions, we utilize the data

Question

Stata Output Questions (50 points) In this set of questions, we utilize the dataset from "Revisiting the Relationship between Competition and Price Discrimination" written by Chandra and Lederman (2018) to look at some interesting questions and help you gain some knowledge in the airline industry and learn some econometric methods The Herfindahl index (also known as Herfindahl-Hirschman Index, or herf in this dataset) is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them. (From Wikipedia). A route served by just one single carrier is considered a monopoly route, having a HHI of 1. Also note that in this dataset herf is already in percentage terms (the maximum is 1-100%). Be careful ofthe units in your interpretations and calculations. Look at the Stata output below and answer the following questions Some additional variables include totpass (total number of passengers), num_car_dir (the number of direct rivals, or competitors), coach_fare (economy class average fare), and biz_fare business class average fare). Please use these information and answer some questions.

Explanation / Answer

1.

Lowest Herfindahl Index in the dataset: 0.2529875

2.

Highest no. of direct rivals in the dataset: 3

3.

IQR for "avg. fare" as depicted in exhibit B:

IQR = Q3 - Q1 = (75th - 25th) percentile = 1149.276 - 476.6543 = 672.6217

4.

We can verify that on avg. the business class fares are more than double the prices of economy class tickets if we look at Exhibit A.

It is given that mean Economy Class fare = 252.9349 and mean Business Class fare = 867.7217.

Hence our statement is verified.

5.

Exhibit B is the average fare of Business Class fare.

This is evident when we look at the data given in B and compare it with that given in A. We see that the mean, std. dev., min., max., in B and those in A for Business Class fare are the same.

Hence we can say surely that exhibit B is the average fare of Business Class fare.

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