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Accepted version

Publication date

2020-03-01

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cc-by-nc-nd (c) Elsevier B.V., 2020
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/173338

Vertical differentiation and airline alliances: The effect of antitrust immunity

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https://doi.org/10.1016/j.regsciurbeco.2020.103517

Abstract

This paper explores the impact of granting antitrust immunity (ATI) to airline alliances in a novel and realistic framework characterized by vertically-differentiated air services. Our theoretical model suggests that non-ATI alliances result in higher quality services at higher fares, whereas granting ATI produces the opposite effect. Using data on the transatlantic market over the period 2010-2017, our theoretical findings on service quality are empirically confirmed. We also relate our theoretical predictions on fares to the empirical results in Brueckner and Singer (2019). Our results indicate that alliances (ATI and non-ATI) concentrate a higher proportion of frequencies on high-quality routings, although airport congestion could mitigate this effect.

Subject

Transport aeri, Cooperació empresarial, Competència econòmica, Oligopolis

Subject (English)

Commercial aeronautics, Enterprise cooperation, Competition, Oligopolies

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Articles publicats en revistes (Econometria, Estadística i Economia Aplicada)

Citation

FAGEDA, Xavier, FLORES-FILLOL, Ricardo and LIN, Ming Hsin. Vertical differentiation and airline alliances: The effect of antitrust immunity. Regional Science and Urban Economics. 2020. Vol. 81, num. 103517. ISSN 0166-0462. [consulted: 12 of June of 2026]. Available at: https://hdl.handle.net/2445/173338

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