Code-sharing and its effect on airline fares and welfare
AbstractAirlines frequently use code-share agreements allowing them to market seats on flights operated by partner airlines. Current studies argue that with complementary networks this generates positive welfare effects because fares for interline passengers who rely on the service of multiple airlines are supposed to fall. However, with codeshare agreements airlines can price discriminate between interline and other passengers. This might harm the latter which has been ignored so far. We show that code-share agreements can lead to welfare losses in the case of complementary networks.
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Bibliographic InfoPaper provided by Center for Network Industries and Infrastructure (CNI) in its series Working Papers with number 2006-15.
Length: 30 pages
Date of creation: 2006
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Airlines; alliances; code-share agreements; antitrust immunity; price discrimination;
Find related papers by JEL classification:
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-14 (All new papers)
- NEP-COM-2007-01-14 (Industrial Competition)
- NEP-MIC-2007-01-14 (Microeconomics)
- NEP-NET-2007-01-14 (Network Economics)
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