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Codeshare restrictions as antitrust remedy

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  • Le, Huubinh B.
  • Yimga, Jules O.

Abstract

To incentivize competitive conduct, the US Department of Justice restricted codesharing between Alaska Airlines and American Airlines in several route scenarios as a condition for allowing the former to acquire Virgin Airlines. Have these restrictions incentivized competitive conduct? This paper investigates their effects on output, price, and revenue in these route scenarios. Estimation results suggest that output and price have significantly decreased, particularly for routes between the airlines' hubs or focus cities, indicating that the restrictions have not incentivized competitive conduct. Rather, the decrease in both output and price suggests that consumers’ demand has decreased. Welfare for consumers and airlines has decreased.

Suggested Citation

  • Le, Huubinh B. & Yimga, Jules O., 2023. "Codeshare restrictions as antitrust remedy," Transport Policy, Elsevier, vol. 138(C), pages 17-24.
    • Handle: RePEc:eee:trapol:v:138:y:2023:i:c:p:17-24
    DOI: 10.1016/j.tranpol.2023.05.004
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    More about this item

    Keywords

    Antitrust policy; Air transportation; Airline codesharing; Route competition;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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