Carve-Outs under Airline Antitrust Immunity

Jan Brueckner and Stef Proost

No 2848, CESifo Working Paper Series from CESifo

Abstract: This paper offers the first formal economic analysis of carve-outs under airline antitrust im- munity. Carve-outs are designed to limit the potential anticompetitive effects of cooperation by alliance partners in hub-to-hub markets, where they provide overlapping nonstop service. While the paper shows that carve-outs are beneficial when the alliance does not involve full integration of the partners’ operations on the hub-to-hub route, its key point is that a carve-out may be harmful when imposed on a joint-venture alliance. A JV alliance involves full exploitation of economies of traffic density on the hub-to-hub route, and a carve-out prevents the realization of these benefits. While a carve-out may limit anticompetitive incentives on the hub-to-hub route, welfare may be reduced if the resulting gains are overshadowed by the efficiency loss generated by the carve-out.

Keywords: carve-out; alliance; antitrust immunity; airlines (search for similar items in EconPapers)
JEL-codes: L40 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.cesifo.org/DocDL/cesifo1_wp2848.pdf (application/pdf)

Related works:
Journal Article: Carve-outs under airline antitrust immunity (2010)
Working Paper: Carve-Outs Under Airline Antitrust Immunity (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2848

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