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Entry Deterrence and Strategic Alliances

Philip Gayle () and Xin Xie

MPRA Paper from University Library of Munich, Germany

Abstract: Researchers have written extensively on the impact that strategic alliances between airlines have on airfare, but little is known of the market entry deterrent impact of strategic alliances. Using a structural econometric model, this paper examines the market entry deterrent impact of codesharing, a form of strategic alliance, between incumbent carriers in domestic air travel markets. We find evidence of market entry deterrence, but deterrence impact depends on the specific type of codesharing between market incumbents as well as the identity of the potential entrant. We quantify the extent to which market incumbents’ codesharing influences potential entrants market entry cost and probability of market entry.

Keywords: Entry Deterrence; Strategic Alliances; Dynamic Entry/Exit Model; Airline Competition (search for similar items in EconPapers)
JEL-codes: L13 L93 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind, nep-reg and nep-tre
Date: 2017-12
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Journal Article: ENTRY DETERRENCE AND STRATEGIC ALLIANCES (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:83233

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