 Who benefits from air service agreements? The case of international air cargo operationsYou Wu, Anne Lange and Benny Mantin Transportation Research Part B: Methodological, 2022, vol. 163, issue C, 281-303 Abstract: Air service agreements between countries spell out diverse provisions, such as reciprocal capacity allocations. We analyze how such agreements, which regulate total capacity in markets, affect total welfare and its distribution. We consider the interactions between two competing cargo airlines, their end customers, logistics service providers—who serve as intermediaries between the former two agent types—as well as the policy makers. Accounting for demand uncertainty, we model this interaction as a two-stage game. In the first stage, the policy makers coordinate equal capacity allocations to the two asset providers, whereas in the second stage, the asset providers compete over prices in the spot market. Solving the model, we characterize the pricing strategies employed by the two competing capacity-constrained asset providers in the spot market when facing price sensitive demand from end customers. We further analyze the corresponding capacity decisions. Keywords: Air service agreement; Spot market; Air cargo; Price competition; Capacity decision (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:transb:v:163:y:2022:i:c:p:281-303 Ordering information: This journal article can be ordered from DOI: 10.1016/j.trb.2022.06.010 Access Statistics for this article Transportation Research Part B: Methodological is currently edited by Fred Mannering More articles in Transportation Research Part B: Methodological from Elsevier |
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