Airline Network Rivalry
AbstractIn this paper, the effects of the strategic interaction between deregulated airlines on their network choice are analyzed. The authors examine whether switching from a linear to a hub-spoke network confers a strategic advantage because it saves costs and improves service quality. They find that, if hubbing lowers total cost (which includes both airline and passenger inconvenience costs), the pursuit of strategic advantages usually intensifies the extent of hubbing. Even if hubbing raises total cost, it might be pursued by the airline either because hubbing is a dominant strategy in an oligopolistic setting or because hubbing will be useful in deterring entry.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 28 (1995)
Issue (Month): 4a (November)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
Web page: http://economics.ca/cje/
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