Conclusions

Abstract

We have presented and applied what we regard as the empirical framework for analyzing productivity, technological change and investment in commercial airline industry. The approach consists, first, of describing and understanding the major characteristics that distinguish the industry: its key institutions, technologies and practices, and only then engaging in a program of econometric estimation and inference. We believe that this approach represents a vast improvement over either shotgun econometrics or pure description that rhapsodizes about the peculiarities of an industry’s culture. The institution-based econometrics also is more fruitful than the use of simple linear regression models to analyze productivity, or the use of questionnaire-based information (typically ignoring such performance measures as profits, productivity, and costs) to analyzing business and economic phenomena. It is only from an institutionally conformal econometric specification, that we can analyze and describe quantitatively the effects of regulatory changes and provide strategic planners in the aircraft engine and aircraft industries with the technology-related information required for decision making. The information developed in this book is the empirical foundation for such decision making.