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Non-Cooperative Game Theory in Measuring Strategic Interactions between Airline Joint-Venture Alliances

Author

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  • Dominik Boniecki
  • Elzbieta Marciszewska

Abstract

Purpose: The paper proposes a research method for measuring strategic interactions between airline joint-venture alliances that compete with each other. Design/Methodology/Approach: The proposed method is based on the non-cooperative game theory with a Nash-Cournot equilibrium. It consists in the development of a model that compares economic performance of airline long-haul, intercontinental operations in two consecutive scenarios, before and after joining an alliance. Findings: A model of strategic interactions between airline joint-venture alliances can be successfully based on the logic of the Nash-Cournot equilibrium. Furthermore, the game theory is an effective tool for analysing economic performance of airline joint business agreements. Practical Implications: The method can be used in measuring bottom line performance of long-haul airline joint business agreements world-wide. For example, on the EU–US airline market, the method can be used in the analysis of the following alliances: United Airlines – Lufthansa Group; American Airlines – International Airlines Group – Finnair; Delta Air Lines – Air France KLM – Virgin Atlantic. Originality/Value: This is a novel approach to research of advanced airline alliance strategies.

Suggested Citation

  • Dominik Boniecki & Elzbieta Marciszewska, 2021. "Non-Cooperative Game Theory in Measuring Strategic Interactions between Airline Joint-Venture Alliances," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 152-164.
    • Handle: RePEc:ers:journl:v:xxiv:y:2021:i:2:p:152-164
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Airline strategy; airline joint-ventures; economic performance; game theory.;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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