Is multimarket contact an antitrust concern? A case of China’s airline market

Ma, Wenliang and Wang, Qiang and Yang, Hangjun and Zhang, Yahua ORCID: https://orcid.org/0000-0003-1522-3402 (2020) Is multimarket contact an antitrust concern? A case of China’s airline market. Transportation Research Part A: Policy and Practice, 132. pp. 515-526. ISSN 0965-8564


Abstract

When firms meet in more than one market, it is generally regarded that the possibility of collusion will increase because of mutual interdependence (or mutual forbearance). Mutual forbearance is tacit collusion that directly results from familiarity and deterrence. This paper examines the effect of multimarket contact on airline prices in the Chinese domestic airline market where private and low-cost carriers have been thriving and high-speed rail services growing quickly in the last few years. We find strong evidence supporting the mutual forbearance hypothesis in high revenue markets. We also find that the collusive effect due to increasing multimarket contact is insignificant within the same airline group, whereas multimarket contact between airlines in different airline groups triggers higher airfares.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Faculty/School / Institute/Centre: Historic - Faculty of Business, Education, Law and Arts - School of Commerce (1 Jul 2013 - 17 Jan 2021)
Faculty/School / Institute/Centre: Historic - Faculty of Business, Education, Law and Arts - School of Commerce (1 Jul 2013 - 17 Jan 2021)
Date Deposited: 29 Jan 2020 06:47
Last Modified: 31 May 2021 01:00
Uncontrolled Keywords: Multimarket contact; Price collusion; Mutual forbearance; China; Airline pricing
Fields of Research (2008): 15 Commerce, Management, Tourism and Services > 1507 Transportation and Freight Services > 150701 Air Transportation and Freight Services
14 Economics > 1402 Applied Economics > 140209 Industry Economics and Industrial Organisation
14 Economics > 1402 Applied Economics > 140217 Transport Economics
Fields of Research (2020): 35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3509 Transportation, logistics and supply chains > 350901 Air transportation and freight services
38 ECONOMICS > 3801 Applied economics > 380109 Industry economics and industrial organisation
38 ECONOMICS > 3801 Applied economics > 380117 Transport economics
Socio-Economic Objectives (2008): B Economic Development > 88 Transport > 8803 Aerospace Transport > 880302 Air Passenger Transport
Identification Number or DOI: https://doi.org/10.1016/j.tra.2019.12.008
URI: http://eprints.usq.edu.au/id/eprint/37527

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