Vertical relations in the air transport industry: A facility-rivalry game

D’Alfonso, Tiziana and Alberto Nastasi

Transportation Research Part E: Logistics and Transportation Review, 2012, vol. 48, issue 5, 993-1008

Abstract: This paper investigates contracts between airports and airlines, in the context of two competing facilities and three types of agreements. The downstream market consists in a route operated by one leader and n−1 followers competing àla Stackelberg in each facility. We develop a multistage game where each airport and its dominant airline decide whether to enter into a contract and which one to engage in. We find that the airport and its dominant airline have incentives to collude in each facility. Nevertheless, the equilibrium is not efficient in terms of social welfare: there is a misalignment between private and social incentives.

Keywords: Vertical contracts; Airports competition; Airlines competition (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (22)

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DOI: 10.1016/j.tre.2012.03.003

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