Essays on economics of airline alliances

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dc.contributor.author Xie, Xin
dc.date.accessioned 2014-04-23T20:12:48Z
dc.date.available 2014-04-23T20:12:48Z
dc.date.issued 2014-04-23
dc.identifier.uri http://hdl.handle.net/2097/17398
dc.description.abstract This dissertation constitutes two essays in the field of industrial organization. Specifically, the research focuses on empirically assessing the market effects of airline alliances. The first essay examines how codesharing, a form of strategic alliances, by airlines affects market entry decisions of potential competitors. Researchers have written extensively on the impact that strategic alliances between airlines have on airfare, but little is known of the market entry deterrent impact of strategic alliances. Using a structural econometric model, this essay examines the market entry deterrent impact of codesharing between incumbent carriers in U.S. domestic air travel markets. We find that a specific type of codesharing between market incumbents has a market entry deterrent effect to Southwest Airlines, but not other potential entrants. Furthermore, we quantify the extent to which market incumbents’ codesharing influences market entry cost of potential entrants. The second essay examines the effects of granting Antitrust Immunity (ATI) to a group of airlines. Airline alliance partners often want to extend cooperation to revenue sharing, which effectively implies joint pricing of their products (explicit price collusion). To explicitly collude on price, airlines must apply to the relevant government authorities for ATI (U.S. Department of Justice and Department of Transportation in the case of air travel markets that have a U.S. airport as an endpoint), which effectively means an exemption from prosecution under the relevant antitrust laws. Whether consumers, on net, benefit from a grant of ATI to partner airlines has caused much public debate. This essay specifically investigates the impact of granting ATI to oneworld alliance members on their price, markup, and various measures of cost. The evidence suggests that the grant of ATI facilitated a decrease in partner carriers’ marginal cost, and increased (decreased) their markup in markets where their service do (do not) overlap. Furthermore, member carriers’ price did not change (decreased) in markets where their services do (do not) overlap, implying that consumers, on net, benefit in terms of price changes. en_US
dc.language.iso en_US en_US
dc.publisher Kansas State University en
dc.subject Entry deterrence en_US
dc.subject Strategic alliances en_US
dc.subject Dynamic entry/exit model en_US
dc.subject Airline competition en_US
dc.subject Antitrust immunity en_US
dc.title Essays on economics of airline alliances en_US
dc.type Dissertation en_US
dc.description.degree Doctor of Philosophy en_US
dc.description.level Doctoral en_US
dc.description.department Department of Economics en_US
dc.description.advisor Philip G. Gayle en_US
dc.subject.umi Economics (0501) en_US
dc.date.published 2014 en_US
dc.date.graduationmonth May en_US


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