Airline Alliances, Carve-Outs and Collusion

Jan Brueckner and Pierre Picard

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: In this paper, we ask how antitrust immunity subject to a carve- out affects collusion incentives in international airline alliances. We show that the gains from economies of density due to higher interline traffic under the alliance strengthen the incentive to collude on the interhub route, while the accompanying revenue gain heightens the incentive to defect from collusive behavior. These two effects exactly cancel in the case of linear demand and linear economies of density. Under this approximation, the incentives for interhub collusion are no different before and after the formation of an airline alliance subject to a carve-out.

Keywords: Airline; Collusion; Competition Policy (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Airline Alliances, Carve-Outs and Collusion (2013)
Working Paper: Airline Alliances, Carve-Outs and Collusion (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:12-09

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