Abstract

http://ssrn.com/abstract=1507665
 
 

References (27)



 
 

Citations (2)



 


 



Carve-Outs Under Airline Antitrust Immunity


Jan K. Brueckner


University of California, Irvine - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Stef Proost


KU Leuven - Department of Economics

November 2009

CESifo Working Paper Series No. 2848

Abstract:     
This paper offers the first formal economic analysis of carve-outs under airline antitrust im- munity. Carve-outs are designed to limit the potential anticompetitive effects of cooperation by alliance partners in hub-to-hub markets, where they provide overlapping nonstop service. While the paper shows that carve-outs are beneficial when the alliance does not involve full integration of the partners’ operations on the hub-to-hub route, its key point is that a carve-out may be harmful when imposed on a joint-venture alliance. A JV alliance involves full exploitation of economies of traffic density on the hub-to-hub route, and a carve-out prevents the realization of these benefits. While a carve-out may limit anticompetitive incentives on the hub-to-hub route, welfare may be reduced if the resulting gains are overshadowed by the efficiency loss generated by the carve-out.

Number of Pages in PDF File: 43

Keywords: carve-out, alliance, antitrust immunity, airlines

JEL Classification: L40

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Date posted: November 17, 2009  

Suggested Citation

Brueckner, Jan K. and Proost, Stef, Carve-Outs Under Airline Antitrust Immunity (November 2009). CESifo Working Paper Series No. 2848. Available at SSRN: http://ssrn.com/abstract=1507665

Contact Information

Jan K. Brueckner (Contact Author)
University of California, Irvine - Department of Economics ( email )
3151 Social Science Plaza
Irvine, CA 92697-5100
United States
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Stef Proost
KU Leuven - Department of Economics ( email )
Leuven, B-3000
Belgium
016 32 66 35 (Phone)
016 32 67 96 (Fax)
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