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Januszewski Forbes, Silke, and
Mara Lederman. 2009. "Adaptation and Vertical Integration in the Airline Industry."
,
99(5): 1831-49.
Show Article Details
DOI: 10.1257/aer.99.5.1831
Abstract:We explore patterns of vertical integration in the US airline industry. Major airlines
subcontract portions of their network to regional partners, which may or
may not be owned. We investigate if ownership economizes on ex post renegotiation
costs. We estimate whether airlines are more likely to use owned regionals
on city pairs with adverse weather (which makes adaptation decisions more
frequent) and on city pairs that are more integrated into the major's network
(which raises the costs of having adaptation decisions resolved suboptimally).
Our results suggest a robust empirical relationship between adaptation and
vertical integration in this setting. (JEL L14, L22, L24, L93)
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Authors:
Januszewski Forbes, Silke (U CA, San Diego)
Lederman, Mara (U Toronto)
JEL Classifications:
L14: Transactional Relationships; Contracts and Reputation; Networks
L22: Firm Organization and Market Structure
L24: Contracting Out; Joint Ventures; Technology Licensing
L93: Air Transportation
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