Can Market Power Be Controlled by Regulation of Core Prices Alone?: An Empirical Analysis of Airport Demand and Car Rental Price

•An Instrumental Variable estimator is used to analyze the relationship between airport concession businesses (that is, airport car rentals) and passenger demand.•The presence of a specific car rental firm, Alamo, is our instrumental variable for car rental prices.•It is shown that an increase in the car rental price reduces passenger demand at large US airports.•The managerial and regulation policy implications of this empirical finding are discussed.