Can parallel airline alliances be welfare improving? The case of airline-airport vertical agreement.

Adrián, Nerja (2022): Can parallel airline alliances be welfare improving? The case of airline-airport vertical agreement. Published in: Transportation Research Part A: Policy and Practice , Vol. 167, (January 2023)

Abstract

Parallel airline alliances have negative effects on consumers a priori; however, they can be counteracted if airports may modify the behavior of airlines. In particular, vertical airport–airline agreements allow the airport to influence the competition downstream market, changing the effects of parallel alliances. In this paper, we analyze the effects of parallel alliances in the context of competition between vertical airport–airline pairs competition. We show that under the influence of airports, parallel alliances are welfare improving, and the number of passengers increases, against former studies. These results offer a new brand of analyses to be considered by authorities that evaluate parallel alliances.

• Item Type: MPRA Paper
• Language: English
• Keywords: Airlines parallel alliances; Concession revenue sharing; Vertical agreements; Airports competition
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D47 - Market Design; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L93 - Air Transportation; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R49 - Other

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