>This doesn't seem consistent with the usual story that big airlines want
>slots allocated by competitive bidding, while small airlines don't. If
>the slots are the source of the monopoly power, competitive bidding
>would lead to full dissipation of the rents, no?
Not at all. The network economies mean that the slots are a lot more valuable to an
established airline, and the differences in the extent to which airlines depend on
existing cities as hubs means that the value to one airline is going to be greater
than any of the others and so it will not lose all its rents to bidding.
But that misses the main point. Big airlines want competitive bidding for _new_ slots,
not existing ones. This will allow them to maintain the value of their existing slots
by strategically out-bidding potential competitors. At least that is my understanding
of their motivations. -- Bill Dickens
William T. Dickens
The Brookings Institution
1775 Massachusetts Avenue, NW
Washington, DC 20036
Phone: (202) 797-6113
FAX: (202) 797-6181
E-MAIL: [EMAIL PROTECTED]
AOL IM: wtdickens
