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Title:Airline alliances, carve-outs and collusion PDF Logo
Authors:Brueckner, Jan K.
Picard, Pierre M.
Issue Date:2011
Series/Report no.:CESifo working paper: Industrial Organisation 3593
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 segment, while the accompanying revenue gain heightens the incentive to defect from collusive behavior. These two effects exactly cancel in the case of linear demands and linear economies of density. Under this approximation, the incentives for interhub collusion are no different before and after the emergence of an airline alliance subject to a carve-out.
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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