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A note on pricing of hub-and-spoke networks

Authors
Journal
Economics Letters
0165-1765
Publisher
Elsevier
Publication Date
Volume
30
Issue
2
Identifiers
DOI: 10.1016/0165-1765(89)90056-6

Abstract

Abstract The difference between competitive and monopolistic pricing of airlines' hub-and-spoke networks is examined. It is found that under reasonable cost conditions pass-through passengers pay lower prices per mile than those originating or ending at the hub. Thus, higher per-mile prices in large hubs do not necessarily signal market power.

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