Market power of hub airports: The role of lock-in effects and downstream competition
In this paper we develop a model of hub competition, which includes duopolistic Bertrand competition on the downstream market in order to analyze the incentives of hub airports to exploit market power in the transfer passenger market. We find evidence that downstream competition limits hub market power and moreover, that there are incentives for a hub airport and its respective network carrier to optimize profits of the overall network jointly. Therefore, strict economic regulation of the business relationship between hub airports and their respective network carrier is rendered unnecessary. Regulators should focus on supporting long-term profit sharing contracts of network carriers and hub airports or other contractual forms to ensure vertical cooperation.
|Date of creation:||Jul 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Universitätsstr. 14-16, 48143 Münster|
Phone: 02 51 / 83-2 29 10
Fax: 02 51 / 83-2 83 99
Web page: https://www.wiwi.uni-muenster.de/ivm/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:mut:wpaper:15. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Birgit Rueschenschmidt)
If references are entirely missing, you can add them using this form.