Alliances in the Air: Some Worldwide Evidence

Marín Uribe, Pedro Luis and Philippe Gagnepain

No 5063, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We consider an empirical model of worldwide airlines? alliances that we apply to a large set of companies for the period 1995-2000, with special attention to US and EU carriers. From the estimation of a cost, capacity and demand system that accounts for cross-price elasticities, we attempt to shed light on several interesting issues: First, we analyse whether alliance members? networks are complements or substitutes. Second, we construct price-cost margins and test several hypothesis of non-cooperative behaviour such as individual Nash and joint price setting within the alliance. We suggest that current alliances' pricing habits are not uniform and range from individual Nash to more competitive behaviours.

Keywords: Alliances; Airline; Cross-price elasticities; Nash behaviour (search for similar items in EconPapers)
JEL-codes: L11 L13 L41 L93 (search for similar items in EconPapers)
Date: 2005-05
New Economics Papers: this item is included in nep-com and nep-net
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Citations: View citations in EconPapers (2)

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