STRATEGIC AIRLINE ALLIANCES AND ENDOGENOUS STACKELBERG EQUILIBRIA
Code-sharing agreements have become common business practices in the airline industry. This paper analyzes the economic effects on fares, traffic levels and welfare of code-sharing alliances between an international and a domestic airline. If these two allied airlines and a separate unallied international airline endogenously choose the role of fare-leader or fare-follower, two types of Stackelberg equilibria exist. This finding suggests that the Stackelberg solution seems reasonable, and provides a guideline for the airlines' role-choosing. Although this complementary alliance improves the social welfare, it decreases the consumer surplus of the direct international passengers and may decrease that of the direct domestic passengers. The code-sharing alliance with the complementary partner is profitable for the airlines, and the airline that fails to ally with its complementary partner will decrease its profits. The policy implications of these findings are briefly discussed.
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Availability:
- Find a library where document is available. Order URL: http://worldcat.org/issn/13665545
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Corporate Authors:
The Boulevard, Langford Lane
Kidlington, Oxford United Kingdom OX5 1GB -
Authors:
- LIN, M H
- Publication Date: 2004-9
Language
- English
Media Info
- Features: Appendices; Figures; References; Tables;
- Pagination: p. 357-384
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Serial:
- Transportation Research Part E: Logistics and Transportation Review
- Volume: 40
- Issue Number: 5
- Publisher: Elsevier
- ISSN: 1366-5545
- Serial URL: http://www.sciencedirect.com/science/journal/13665545
Subject/Index Terms
- TRT Terms: Airlines; Code sharing; Domestic transportation; Economic analysis; Equilibrium (Economics); Fares; International travel; Passenger traffic; Profitability; Strategic alliances; Welfare economics
- Subject Areas: Aviation; Economics;
Filing Info
- Accession Number: 00977940
- Record Type: Publication
- Files: TRIS
- Created Date: Aug 20 2004 12:00AM