Abstract

http://ssrn.com/abstract=1727393
 
 

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Airline Alliances, Antitrust Immunity and Market Foreclosure


Volodymyr Bilotkach


Newcastle Business School

Kai Hüschelrath


Centre for European Economic Research (ZEW); WHU - Otto Beisheim School of Management

2010

ZEW - Centre for European Economic Research Discussion Paper No. 10-083

Abstract:     
This paper examines the issue of market foreclosure by airline partnerships with antitrust immunity. Overlapping the data on frequency of service and passenger volumes on nonstop routes on the transatlantic airline market with the information on dynamics of airline partnerships, we find evidence consistent with the airlines operating under antitrust immunity refusing to accept connecting passengers from the carriers outside of the partnership at respective hub airports. When an airline partnership is granted antitrust immunity, airlines outside this partnership end up reducing their traffic to the partner airlines’ hub airports by 2.6-8.5 percent (depending on the specification and estimation technique involved). Our results suggest ambiguous welfare effects of antitrust immunity on some markets, where previous studies indicated airline consolidation should benefit consumers.

Number of Pages in PDF File: 36

Keywords: Air transportation, alliances, antitrust immunity, foreclosure

JEL Classification: L41, L93, K21

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Date posted: December 19, 2010  

Suggested Citation

Bilotkach, Volodymyr and Hüschelrath, Kai, Airline Alliances, Antitrust Immunity and Market Foreclosure (2010). ZEW - Centre for European Economic Research Discussion Paper No. 10-083. Available at SSRN: http://ssrn.com/abstract=1727393 or http://dx.doi.org/10.2139/ssrn.1727393

Contact Information

Volodymyr Bilotkach
Newcastle Business School ( email )
Newcastle upon-Tyne, NE1 8ST
United Kingdom
Kai Hüschelrath (Contact Author)
Centre for European Economic Research (ZEW) ( email )
P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany
WHU - Otto Beisheim School of Management ( email )
Burgplatz 2
D-56179 Vallendar, 56179
Germany
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