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Lookup NU author(s): Dr Volodymyr Bilotkach
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This paper develops a model of price competition between two international airline alliances, with consumers' preferences vertically differentiated by the number of stops. Alliances benefit the interline passengers. Alliances with antitrust immunity do not benefit interline passengers more than those without antitrust immunity, in contrast to the Cournot-type settings. While antitrust immunity leads to higher fares for non-stop travel between hubs of alliance partners, granting it might be necessary to induce consolidation between carriers. Formation of alliances with antitrust immunity is consistent with the proposed model, even though these are likely to decrease individual carriers' profit.
Author(s): Bilotkach V
Publication type: Article
Publication status: Published
Journal: Journal of Transport Economics and Policy
Year: 2005
Volume: 39
Issue: 2
Pages: 167-189
ISSN (print): 0022-5258
ISSN (electronic): 1754-5951
Publisher: University of Bath
URL: http://www.jstor.org/stable/20053959
