Effects of Open Skies Policy in the Dominican Republic: A Quasi-Experimental Analysis

Abstract

Abstract Unilateral open skies policy in the Dominican Republic produces large gains in welfare through the channel of competition between airlines. We document the effect of this policy on GDP and the flow of passengers. Using a synthetic difference-in-differences model, we find evidence that the reforms increased the GDP per capita in figures between 3.2% and 6.2% on average in five years (2007–2012). From difference-in-differences models, we find that the flow of American passengers increased by 30 percent in the years following the 2006 reforms. We also show that the market shares of airliners fell 30 percent on average for the same period. (JEL D12, L11, L51, L83, L98)