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Alliances and entry in a simple airline network

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  • Ming Hsin Lin

    (Graduate School of Economics, Nagoya University)

Abstract

This paper constructs an entry and code-sharing alliances game to demonstrate that the alliance between the incumbent carriers may play a significant role of entry deterrence in a given airline network. We show that incumbents can use the alliances as a credible threat to deter the entry of the potential entrants who have no significant cost advantage. This finding suggests that the role of the alliance in entry deterrence should be considered carefully when governments promote and maintain competition in the deregulated airline network markets.

Suggested Citation

  • Ming Hsin Lin, 2005. "Alliances and entry in a simple airline network," Economics Bulletin, AccessEcon, vol. 12(4), pages 1-11.
    • Handle: RePEc:ebl:ecbull:eb-04l90001
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    References listed on IDEAS

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    Cited by:

    1. Mahito Okura, 2009. "An economic analysis of risk management in the airline industry," Economics Bulletin, AccessEcon, vol. 29(2), pages 566-574.
    2. Philippe Barla & Christos Constantatos, 2006. "On The Choice between Strategic Alliance and Merger in the Airline Sector: The Role of Strategic Effects," Journal of Transport Economics and Policy, University of Bath, vol. 40(3), pages 409-424, September.
    3. Hattori Keisuke & Lin Ming-Hsin, 2011. "Alliance Partner Choice in Markets with Vertical and Horizontal Externalities," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 11(1), pages 1-27, June.
    4. Keisuke Hattori & Lin Ming Hsin, 2014. "Complementary Alliances in Composite Good Markets with Network Structure," Manchester School, University of Manchester, vol. 82(1), pages 33-51, January.
    5. Cristina Barbot, 2006. "Entry and Accommodation in Airline Markets: Easyjet Caught in the Middle on the London-Grenoble Route," CEF.UP Working Papers 0602, Universidade do Porto, Faculdade de Economia do Porto.
    6. Philip G. Gayle & Xin Xie, 2018. "Entry Deterrence And Strategic Alliances," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1898-1924, July.
    7. Noha S. Omar & Khalid Sekkat, 2012. "Egypt Airline Passengers Market: Competition and Performance," Working Papers 669, Economic Research Forum, revised 2012.
    8. Valido, Jorge & Socorro, M. Pilar & Medda, Francesca, 2020. "Airport capacity and entry deterrence: Low cost versus full service airlines," Economics of Transportation, Elsevier, vol. 22(C).
    9. Akio Kawasaki & Ming Hsin Lin, 2013. "Airline Schedule Competition and the Entry Route Choices of Low-Cost Carriers," Australian Economic Papers, Wiley Blackwell, vol. 52(2), pages 97-114, June.
    10. Jorge Valido & M. Pilar Socorro & Francesca Medda, 2013. "DYPES: Vertical differentiation, schedule delay and entry deterrence: Low cost vs. full service airlines," Working Papers 2013-05, FEDEA.

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    JEL classification:

    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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