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Alliances and entry in a simple airline network

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Author Info
Ming Hsin Lin () (Graduate School of Economics, Nagoya University)
Abstract

This paper constructs an entry and code-sharing alliances game to demonstrate that the alliance between the incumbent carriers may play a significant role of entry deterrence in a given airline network. We show that incumbents can use the alliances as a credible threat to deter the entry of the potential entrants who have no significant cost advantage. This finding suggests that the role of the alliance in entry deterrence should be considered carefully when governments promote and maintain competition in the deregulated airline network markets.

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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 12 (2005)
Issue (Month): 4 ()
Pages: 1-11
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:12:y:2005:i:4:p:1-11

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Related research
Keywords: Airline alliances; Entry deterrence; Hub-spoke network;

Find related papers by JEL classification:
L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
L5 - Industrial Organization - - Regulation and Industrial Policy

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Eric Pels & Peter Nijkamp & Piet Rietveld, 1997. "Substitution and Complementarity in Aviation: Airports vs. Airlines," Tinbergen Institute Discussion Papers 97-097/3, Tinbergen Institute.
  2. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June. [Downloadable!] (restricted)
  3. Encaoua, David & Moreaux, Michel & Perrot, Anne, 1996. "Compatibility and competition in airlines demand side network effects," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 701-726, October. [Downloadable!] (restricted)
    Other versions:
  4. Joseph Berechman & Sougata Poddar & Oz Shy, 1997. "Network Structure and Entry, in the Deregulated Airline Industry," CIE Discussion Papers 1997-10, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    Other versions:
  5. Brueckner, Jan K., 2001. "The economics of international codesharing: an analysis of airline alliances," International Journal of Industrial Organization, Elsevier, vol. 19(10), pages 1475-1498, December. [Downloadable!] (restricted)
  6. Hendricks, K. & Piccione, M. & Tan, G., 1995. "Entry and Exit in Hub-Spoke Networks," UBC Departmental Archives 95-20, UBC Department of Economics.
    Other versions:
  7. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March. [Downloadable!] (restricted)
    Other versions:
  8. Tae Hoon Oum & Anming Zhang & Yimin Zhang, 1995. "Airline Network Rivalry," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 836-57, November.
  9. Youssef, Waleed & Hansen, Mark, 1994. "Consequences of strategic alliances between international airlines: The case of Swissair and SAS," Transportation Research Part A: Policy and Practice, Elsevier, vol. 28(5), pages 415-431, September. [Downloadable!] (restricted)
  10. Brueckner, Jan K & Whalen, W Tom, 2000. "The Price Effects of International Airline Alliances," Journal of Law & Economics, University of Chicago Press, vol. 43(2), pages 503-45, October.
  11. Park, Jong-Hun & Zhang, Anming & Zhang, Yimin, 2001. "Analytical models of international alliances in the airline industry," Transportation Research Part B: Methodological, Elsevier, vol. 35(9), pages 865-886, November. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Barla, Philippe & Constantatos, Christos, 2005. "On the Choice between Strategic Alliance and Merger in the Airline Sector: the Role of Strategic Effects," Cahiers de recherche 0502, GREEN. [Downloadable!]
    Other versions:
  2. Cristina Barbot, 2006. "Entry and Accommodation in Airline Markets: Easyjet Caught in the Middle on the London-Grenoble Route," CETE Discussion Papers 0602, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
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This page was last updated on 2009-11-16.

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