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Title:Carve-outs under airline antitrust immunity PDF Logo
Authors:Brueckner, Jan Keith
Proost, Stef
Issue Date:2009
Series/Report no.:CESifo working paper 2848
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.
Subjects:carve-out
alliance
antitrust immunity
airlines
JEL:L40
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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