AIRLINES: SETTING CONSTRAINTS ON HUB DOMINANCE

This paper focuses on the dominance of major hub airports by major airlines. The dominance appears to raise airline prices significantly, while also possibly providing economies of density. The question is the relative importance of those effects. The authors consider an analysis by Brueckner and Spiller, which favors simple monopoly. This paper finds instead that a constraint on hub dominance would probably not reduce the achievement of economies of density by all airlines using each airport. Therefore, pending further research, imposing a limit on hub dominance might improve total efficiency.