Did the entry of low cost companies foster the growth of strategic alliances in the airline industry?

Andrea Mantovani and Ornella Tarola

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: In this paper we adopt a vertical differentiation model to study the effect of deregulation in the airline industry. In particular, we focus on the entry of low cost companies, which succeed in providing essential flight services at relatively cheap prices. We argue that the entry of very aggressive rivals pushed traditional carriers to react by forming strategic alliances and exploit economies of densities trough hub-and-spoke systems. We verify that a strategic alliance is profitable if the gain in terms of economies of density is sufficiently high and consumers utility is not significantly decreased by the indirect connection.

Date: 2006-09
New Economics Papers: this item is included in nep-com, nep-cse, nep-ind and nep-tur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://amsacta.unibo.it/4712/1/574.pdf (application/pdf)

Related works:
Journal Article: Did the Entry of Low Cost Companies Foster the Growth of Strategic Alliances in the Airline Industry? (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:574

Access Statistics for this paper

More papers in Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna Contact information at EDIRC.
Bibliographic data for series maintained by Dipartimento Scienze Economiche, Universita' di Bologna (dse.info@unibo.it).