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Airline alliances, antitrust immunity and market foreclosure

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  • Bilotkach, Volodymyr
  • Hüschelrath, Kai

Abstract

We examine the issue of market foreclosure by airline partnerships with antitrust immunity. Overlapping data on frequency of service and passenger volumes on non-stop transatlantic routes with information on the dynamics of airline partnerships, we find evidence consistent with the airlines operating under antitrust immunity refusing to accept connecting passengers from the outside carriers at respective hub airports. Following the antitrust immunity, airlines outside the partnership reduce their traffic to the partner airlines' hub airports by 4.1-11.5 percent. We suggest regulators should take possible market foreclosure effects into account when assessing the competitive effects of antitrust immunity for airline alliances.

Suggested Citation

  • Bilotkach, Volodymyr & Hüschelrath, Kai, 2012. "Airline alliances, antitrust immunity and market foreclosure," ZEW Discussion Papers 10-083 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:10083r
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    References listed on IDEAS

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    Cited by:

    1. Bilotkach, Volodymyr & Hüschelrath, Kai, 2015. "Balancing competition and cooperation: Evidence from transatlantic airline markets," ZEW Discussion Papers 15-059, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Stephen Martin, 2012. "Market Structure and Market Performance," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(2), pages 87-108, March.
    3. Xia, Wenyi & Zhang, Anming, 2016. "High-speed rail and air transport competition and cooperation: A vertical differentiation approach," Transportation Research Part B: Methodological, Elsevier, vol. 94(C), pages 456-481.

    More about this item

    Keywords

    air transportation; alliances; antitrust immunity; foreclosure;

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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