A Structural Model of Intra-EU Duopoly Airline Competition

A Structural Model of Intra-EU Duopoly Airline Competition

Using a two-countries/two-airlines framework, three different competition scenarios are analysed. These reflect the new EU competition rules. The results suggest that the use of hub-and-spoke networks results in significant welfare gains. In addition, the model shows that cross-border mergers may increase net social welfare.

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