IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v74y2019icp30-38.html
   My bibliography  Save this article

US open skies agreements and unlevel playing fields

Author

Listed:
  • Morrison, William G.
  • de Wit, Jaap

Abstract

We examine the relationship between ‘Open Skies’ agreements (OSAs) signed between the USA and various countries or regions and the existence of subsidies and other forms of protection that advantage one nation's airlines over those of co-signatories to an OSA. We argue that under an oligopoly market structure, strategic competition brought about by OSAs creates incentives to subsidize and/or protect domestic airlines. Such incentives are maintained or amplified by political lobbying efforts that bias civil aviation policies towards producer interests over wider measures of economic welfare. We report on financial aid and policies which have advantaged US airlines during the OSA period and which suggest that unlevel playing fields have been made more unlevel during the era of OSAs.

Suggested Citation

  • Morrison, William G. & de Wit, Jaap, 2019. "US open skies agreements and unlevel playing fields," Journal of Air Transport Management, Elsevier, vol. 74(C), pages 30-38.
    • Handle: RePEc:eee:jaitra:v:74:y:2019:i:c:p:30-38
    DOI: 10.1016/j.jairtraman.2018.09.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699718303909
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jairtraman.2018.09.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    2. Brueckner, Jan K. & Pels, Eric, 2005. "European airline mergers, alliance consolidation, and consumer welfare," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 27-41.
    3. Olivier Boylaud & Giuseppe Nicoletti, 2003. "Regulation, market structure and performance in telecommunications," OECD Economic Studies, OECD Publishing, vol. 2001(1), pages 99-142.
    4. Neary, J. Peter, 1994. "Cost asymmetries in international subsidy games: Should governments help winners or losers?," Journal of International Economics, Elsevier, vol. 37(3-4), pages 197-218, November.
    5. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    6. Alderighi, Marco & Cento, Alessandro & Nijkamp, Peter & Rietveld, Piet, 2012. "Competition in the European aviation market: the entry of low-cost airlines," Journal of Transport Geography, Elsevier, vol. 24(C), pages 223-233.
    7. Ciliberto, Federico & Schenone, Carola, 2012. "Bankruptcy and product-market competition: Evidence from the airline industry," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 564-577.
    8. Christidis, Panayotis, 2016. "Four shades of Open Skies: European Union and four main external partners," Journal of Transport Geography, Elsevier, vol. 50(C), pages 105-114.
    9. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
    10. Rauf Gönenç & Giuseppe Nicoletti, 2003. "Regulation, market structure and performance in air passenger transportation," OECD Economic Studies, OECD Publishing, vol. 2001(1), pages 183-227.
    11. Gillen, David & Harris, Richard & Hoon Oum, Tae, 2002. "Measuring the economic effects of bilateral liberalization air transport," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(3-4), pages 155-174, May.
    12. Bowlin, William F., 2004. "Financial analysis of civil reserve air fleet participants using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 154(3), pages 691-709, May.
    13. William Gillespie & Oliver M. Richard, 2011. "Antitrust Immunity and International Airline Alliances," EAG Discussions Papers 201101, Department of Justice, Antitrust Division.
    14. James A. Brander & Anming Zhang, 1990. "Market Conduct in the Airline Industry: An Empirical Investigation," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 567-583, Winter.
    15. Barbara J. Spencer & James A. Brander, 1983. "International R & D Rivalry and Industrial Strategy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(4), pages 707-722.
    16. Tretheway, Mike & Andriulaitis, Robert, 2015. "What do we mean by a level playing field in international aviation?," Transport Policy, Elsevier, vol. 43(C), pages 96-103.
    17. de Wit, Jaap G., 2014. "Unlevel playing field? Ah yes, you mean protectionism," Journal of Air Transport Management, Elsevier, vol. 41(C), pages 22-29.
    18. Kishore Gawande & Usree Bandyopadhyay, 2000. "Is Protection for Sale? Evidence on the Grossman-Helpman Theory of Endogenous Protection," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 139-152, February.
    19. Volodymyr Bilotkach & Kai Hüschelrath, 2013. "Airline Alliances, Antitrust Immunity, and Market Foreclosure," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1368-1385, October.
    20. Gordon C. Rausser & William E. Foster, 1990. "Political Preference Functions and Public Policy Reform," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 641-652.
    21. Mike Tretheway & Robert Andriulaitis, 2015. "What Do We Mean by a Level Playing Field in International Aviation?," International Transport Forum Discussion Papers 2015/6, OECD Publishing.
    22. Tsoukalas, Gerassimos & Belobaba, Peter & Swelbar, William, 2008. "Cost convergence in the US airline industry: An analysis of unit costs 1995–2006," Journal of Air Transport Management, Elsevier, vol. 14(4), pages 179-187.
    23. Brown, Richard S., 2016. "Lobbying, political connectedness and financial performance in the air transportation industry," Journal of Air Transport Management, Elsevier, vol. 54(C), pages 61-69.
    24. Button, Kenneth, 2009. "The impact of US–EU “Open Skies†agreement on airline market structures and airline networks," Journal of Air Transport Management, Elsevier, vol. 15(2), pages 59-71.
    25. Bilotkach, Volodymyr & Hüschelrath, Kai, 2012. "Airline alliances and antitrust policy: The role of efficiencies," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 76-84.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christopher Findlay & Hein Roelfsema & Niall Van De Wouw, 2021. "Feeling the Pulse of Global Value Chains: Air Cargo and COVID-19," Working Papers DP-2021-23, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Abate, Megersa & Christidis, Panayotis & Purwanto, Alloysius Joko, 2020. "Government support to airlines in the aftermath of the COVID-19 pandemic," Journal of Air Transport Management, Elsevier, vol. 89(C).
    3. Rockie U Kei Kuok & Tay T.R. Koo & Christine Lim, 2024. "Air transport capacity and tourism demand: A panel cointegration approach with cross-sectionally augmented autoregressive distributed lag (CS-ARDL) model," Tourism Economics, , vol. 30(3), pages 702-727, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. William Morrison, Jaap de Wit, 2017. "US Open Skies Agreements and Unlevel Playing Fields," LCERPA Working Papers 0104, Laurier Centre for Economic Research and Policy Analysis, revised 01 Aug 2017.
    2. Alexandr Knobel, 2010. "Factors of important Tariff Information," Research Paper Series, Gaidar Institute for Economic Policy, issue 143P.
    3. Deniz Igan & Prachi Mishra & Thierry Tressel, 2012. "A Fistful of Dollars: Lobbying and the Financial Crisis," NBER Macroeconomics Annual, University of Chicago Press, vol. 26(1), pages 195-230.
    4. Giacomo Ponzetto, 2008. "Asymmetric information and trade policy," Economics Working Papers 1253, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2010.
    5. Tomaso Duso & Lars-Hendrik Röller, 2001. "Towards a Political Economy of Industrial Organization: Empirical Regularities from Deregulation," CIG Working Papers FS IV 01-17, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    6. Richard Damania & Per G. Fredriksson & Thomas Osang, 2005. "Polluters and Collective Action: Theory and Evidence," Southern Economic Journal, John Wiley & Sons, vol. 72(1), pages 167-185, July.
    7. Ingo Borchert & Batshur Gootiiz & Arti Grover Goswami & Aaditya Mattoo, 2017. "Services Trade Protection and Economic Isolation," The World Economy, Wiley Blackwell, vol. 40(3), pages 632-652, March.
    8. Pokrivcak, Jan, 2007. "Economics and Political Economy of Regional Trade Agreements," Working Papers 7286, TRADEAG - Agricultural Trade Agreements.
    9. Tomaso Duso, 2005. "Lobbying and regulation in a political economy: Evidence from the U.S. cellular industry," Public Choice, Springer, vol. 122(3), pages 251-276, March.
    10. Kishore Gawande & Pravin Krishna & Michael J. Robbins, 2006. "Foreign Lobbies and U.S. Trade Policy," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 563-571, August.
    11. Martimort, David, 2019. ""When Olson Meets Dahl": From Inefficient Groups Formation to Inefficient Policy-Making," CEPR Discussion Papers 13843, C.E.P.R. Discussion Papers.
    12. Don P. Clark & Donald Bruce, 2006. "Who Bears The Burden Of U.S. Nontariff Measures?," Contemporary Economic Policy, Western Economic Association International, vol. 24(2), pages 274-286, April.
    13. Adler, Nicole & Hanany, Eran, 2016. "Regulating inter-firm agreements: The case of airline codesharing in parallel networks," Transportation Research Part B: Methodological, Elsevier, vol. 84(C), pages 31-54.
    14. Atif Mian & Amir Sufi & Francesco Trebbi, 2010. "The Political Economy of the US Mortgage Default Crisis," American Economic Review, American Economic Association, vol. 100(5), pages 1967-1998, December.
    15. Chari, Anusha & Gupta, Nandini, 2008. "Incumbents and protectionism: The political economy of foreign entry liberalization," Journal of Financial Economics, Elsevier, vol. 88(3), pages 633-656, June.
    16. Olper, Alessandro, 2017. "The political economy of trade-related regulatory policy: environment and global value chain," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(3), February.
    17. Richard Damania & Per Fredriksson & Thomas Osang, 2004. "Collusion, Collective Action and Protection: Theory and Evidence," Public Choice, Springer, vol. 121(3), pages 279-308, February.
    18. Abate, Megersa & Christidis, Panayotis, 2020. "The impact of air transport market liberalization: Evidence from EU's external aviation policy," Economics of Transportation, Elsevier, vol. 22(C).
    19. By Kishore Gawande & Pravin Krishna & Marcelo Olarreaga, 2012. "Lobbying Competition Over Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 115-132, February.
    20. Megerska Abate & Panayotis Christidis, 2017. "Economic Effects of the EU External Aviation Policy," JRC Research Reports JRC105822, Joint Research Centre.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:74:y:2019:i:c:p:30-38. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.