Airline strategic alliances in overlapping Markets: Should policymakers be concerned?

Gayle, Philip and Brown, Dave (2015): Airline strategic alliances in overlapping Markets: Should policymakers be concerned? Forthcoming in: Economics of Transportation

Abstract

When there is significant overlap in potential partner airlines' route networks, policymakers have expressed concern that an alliance between such airlines may facilitate collusion on price and/or service levels in the partners' overlapping markets. The contribution of our paper is to put together a structural econometric model that is able to explicitly disentangle the demand and supply effects associated with an alliance between such airlines. The estimates from our structural econometric model do identify demand-increasing effects associated with the Delta/Continental/Northwest alliance, but statistically reject collusive behavior between the partners.

• Item Type: MPRA Paper
• Language: English
• Keywords: Codeshare Alliance; Collusion; Airline Competition; Discrete Choice Demand Model; Nested Logit
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L4 - Antitrust Issues and Policies > L40 - General; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L93 - Air Transportation

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