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Hub-Airport Competition: Connecting Time Differentiation And Concession Consumption

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  • MING HSIN LIN

Abstract

This paper develops a network model to analyse the economic effects resulting from the non-price competition between the home country's and neighbouring country's hub-airports. Focusing on the trade-off relationship between the length of the connecting time in the hub-airport and the consumption opportunities of the transfer passengers, we demonstrate theoretically that even though the hub-airport bears a cost disadvantage over its rival in providing the hub-airport service, it still has a chance to earn more profits than its rival by the setting of the connecting time. This finding suggests a new methodology for hub-airports that attempt to alleviate price competition. Copyright 2006 The Authors Journal compilation 2006 Blackwell Publishing Ltd/University of Adelaide and Flinders University .

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  • Ming Hsin Lin, 2006. "Hub-Airport Competition: Connecting Time Differentiation And Concession Consumption ," Australian Economic Papers, Wiley Blackwell, vol. 45(4), pages 299-317, December.
  • Handle: RePEc:bla:ausecp:v:45:y:2006:i:4:p:299-317
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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
    2. Dave Furth & Dan Kovenock, 1993. "Price leadership in a duopoly with capacity constraints and product differentiation," Journal of Economics, Springer, vol. 57(1), pages 1-35, February.
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