Bamberger, Gustavo E., Dennis W. Carlton and Lynette R. Neumann (2004) “An Empirical Investigation of the Competitive Effects of Domestic Airline Alliances,” Journal of Law and Economics, 47(1):195–222.Google Scholar
Belleflamme, Paul and Martin Peitz (2010) Industrial Organization. Cambridge Books, Cambridge University Press, New York.Google Scholar
Bilotkach, Volodymyr (2005) “Price Competition between International Airline Alliances,” Journal of Transport Economics and Policy, 39(2):167–190.Google Scholar
Brueckner, Jan K. and Tom W. Whalen (2000) “The Price Effects of International Airline Alliances,” Journal of Law and Economics, 43(2):503–545.Google Scholar
Chen, Yongmin and Philip G. Gayle (2007) “Vertical Contracting Between Airlines: An Equilibrium Analysis of Codeshare Alliances,” International Journal of Industrial Organization, 25(5):1046–1060.CrossrefGoogle Scholar
Fang, Ying and Robin Sickles (2007) “A Dynamic Model of Airline Competition,” Review of Network Economics, 6(3):355–371.Google Scholar
Flores-Fillol, Ricardo and Rafael Moner-Colonques (2007) “Strategic Formation of Airline Alliances,” Journal of Transport Economics and Policy, 41(3):427–449.Google Scholar
Gayle, Phillip (2007) “Airline Code-share Alliances and their Competitive Effects,” Journal of Law and Economics, 50:781–819.Google Scholar
Hassin, Orit and Oz Shy (2004) “Code-Sharing Agreements and Interconnections in Markets for International Flights,” Review of International Economics, 12(3):337–352.Google Scholar
Park, Jong-Hun, Namgyoo Park and Anming Zhang (2003) “The Impact of International Alliances on Rival Firm Value: A Study of the British Airways/USAir Alliance,” Transportation Research E, 39(1):1–18.Google Scholar
Salant, Stephen W., Sheldon Switzer and Robert J. Reynolds (1983) “Losses from Horizontal Mergers: The Effect of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium,” Quarterly Journal of Economics, 98(2):185–199.CrossrefGoogle Scholar
Salvanes Kjell G., Frode Steen and Lars Sørgard (2003) “Collude, Compete, or Both? Deregulation in the Norwegian Airline Industry,” Journal of Transport Economics and Policy, 37(3):383–416.Google Scholar
US Department of Justice (2009) Public version, Comments of the Department of Justice on the Show Cause Order. In DOT Docket OST-2008-0234 (http://www.regulations.gov/fdmspublic/component/main?main=DocketD etail&d=DOT-OST-2008-0234).
US Department of Transportation (2009) Final Order. In DOT Docket OST-2008-0234 (http://www.regulations.gov/fdmspublic/component/main?main =DocketDetail&d=DOT- OST-2008-0234).
Whalen, W. Tom (2007) “A Panel Data Analysis of Code-Sharing, Antitrust Immunity, and Open Skies Treaties in International Aviation Markets,” Review of Industrial Organization, 30(1):39–61.CrossrefGoogle Scholar
Zhang, Yahua and David K. Round (2011) “Price Wars and Price Collusion in China s Airline Markets,” International Journal of Industrial Organization, 29(4):361–372.Web of ScienceCrossrefGoogle Scholar
About the article
Published Online: 2013-05-15
Published in Print: 2013-06-01
See Brueckner (2001, 2003) and Brueckner and Whalen (2000). A large additional literature on alliances exists. See Bamberger et al. (2004), Bilotkach (2005), Chen and Gayle (2007), Flores-Fillol and Moner-Colonques (2007), Gayle (2007, 2008), Hassin and Shy (2004), Park (1997), Park et al. (2001, 2003), Park and Zhang (1998), and Whalen (2007).
For empirical studies, see Evans and Kessides (1994), Salvanes et al. (2003), Fang and Sickles (2007), Miller (2010), and Zhang and Round (2011).
Although this setup is superficially different from that of Brueckner and Proost (2010), which relies on “ subfares,” the two approaches are equivalent.
As in Brueckner and Proost (2010), we do not distinguish between capacity and price choices in the interline market. As in the literature, the double-marginalization problem in the interline market is more conveniently discussed in a model with price strategies, with the chosen prices determining seat capacities on the ah and jb routes. We are not aware of discussions of double marginalization and access price models with capacity setting.
Note this conclusion need not be true when the airlines are instead allowed to cooperate in both the hj and ab markets, as argued by Bruekner (2001).
This approximation is obtained by developing a Taylor series of