Code-sharing, price discrimination and welfare losses

Achim I. Czerny ()

No 08-05, WHU Working Paper Series - Economics Group from WHU - Otto Beisheim School of Management

Abstract: Airlines frequently use code-share agreements allowing each other to market seats on flights operated by partner airlines. Regulation may allow code-share agreements with antitrust immunity (cooperative price setting), or without antitrust immunity, or not at all. I compare relative welfare effects of these regulation regimes for complementary airline networks. A crucial point is that such agreements are used to identify and price discriminate interline passengers. I find that interline passengers always benefit from code-share agreements while non-interline passengers are worse off. Furthermore, I show that the second effect questions the overall usefulness of code-share agreements from a welfare perspective.

Keywords: Airlines; alliances; code-share agreements; antitrust immunity; price discrimination (search for similar items in EconPapers)
JEL-codes: D01 L13 L41 L51 L93 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2008-03
References: View references in EconPapers View complete reference list from CitEc
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Published Journal of Transport Economics and Policy, Vol. 43, No. 2 (May, 2009), pp. 193-212

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