Tuesday, December 29, 2009

Code-sharing, Price Discrimination and Welfare Losses

Achim I. Czerny, Code-sharing, Price Discrimination and Welfare Losses, 43 J. Transp. Econ. & Pol'y 193 (2009) (available to subscribers here).  From the abstract:

Airlines frequently use code-share agreements allowing each other to market seats on flights operated by partner airlines. Regulation may allow code-share agreements with antitrust immunity (cooperative price setting), or without antitrust immunity, or not at all. I compare the relative welfare effects of these regulation regimes on complementary airline networks. A crucial point is that such agreements are used to identify and price-discriminate interline passengers. I find that interline passengers always benefit from code-share agreements while non-interline passengers are worse off. Furthermore, I show that the latter effect questions the overall usefulness of code-share agreements from a welfare perspective.

http://lawprofessors.typepad.com/aviation/2009/12/codesharing-price-discrimination-and-welfare-losses-.html

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