Air cargo alliances and competition in passenger markets

Anming Zhang, Yer Van Hui and Lawrence Leung

Transportation Research Part E: Logistics and Transportation Review, 2004, vol. 40, issue 2, 83-100

Abstract: This paper develops an oligopoly model to investigate the effect of an air cargo alliance on competition in passenger markets. We consider a model in which the partners, while continuing to offer their respective passenger services, jointly offer a new integrated cargo service by utilizing their passenger aircraft and routes. We find that such an alliance will likely increase the partners' own outputs, while simultaneously decreasing its rivals' outputs, in not only the cargo market but also the secondary passenger market. Furthermore, the alliance is likely to reduce passenger prices and increase total surplus.

Keywords: Strategic; alliances; Passenger; services; Oligopoly; rivalry; Joint; production; of; passenger; and; cargo; services (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (17)

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