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ABSTRACTThis paper studies effects of price floors in a simple model of vertical product differentiation. We find that even non‐binding price floor (i.e., minimum price set below the lowest Nash equilibrium price in the baseline model) can increase quality on the market, if the cost of quality is sufficiently low. Where a binding price floor does not increase the equilibrium quality, it makes consumers worse off. There is also a possibility of over‐investment into quality as a result of the binding minimum price.

The market developments in international air transportation have led to the dominance of three global airline alliances - Star, SkyTeam and oneworld. At the same time, members of these alliances receive increasingly more freedom in coordinating various aspects of joint operations, including scheduling and pricing decisions, as well as the right to form revenue-sharing joint ventures in international markets. Although the significant consumer benefits generated by airline cooperation are undisputed, the recent developments raise antitrust concerns. Against this background, the paper compares the key competitive effects of airline alliances and antitrust immunity with the economic lines of reasoning in recent policy actions to develop recommendations for a full-fledged assessment of antitrust immunity for airline alliances.

AbstractThe U.S. Department of Transportation is responsible for implementing new safety improvements and regulations with the goal of ensuring limited funds are distributed to where they can have the greatest impact on safety. In this work, we conduct a study of new regulations and other reactions (such as recalls) to fatal accidents in several different modes of transportation implemented from 2002 to 2009. We find that in the safest modes of commercial aviation and bus transport, the amount of spending on new regulations is high in relation to the number of fatalities compared to the regulatory attention received by less safe modes of general aviation and private automobiles. Additionally, we study two major fatal accident investigations from commercial aviation and two major automotive recalls associated with fatal accidents. We find differences in the cost per expected fatality prevented for these reactions, with the airline accident investigations being more cost effective. Overall, we observe trends in both the automotive and aviation sectors that suggest that public transportation receives more regulatory attention than private transport. We also observe that the types of safety remedies utilized, regulation versus investigation, have varying levels of effectiveness in different transport modes. We suggest that these differences are indicative of increased public demand for safety in modes where a third party may be held responsible, even for those not participating in the transportation. These findings have important implications for the transportation industry, policymakers, and for estimating the public demand for safety in new transport modes.

Cover -- Half Title -- Title Page -- Copyright Page -- Table of contents -- Contributors -- 1 Introduction -- Note -- 2 Regional economic theory and the impact of transport investments -- Introduction -- How natural advantage and governance can explain differences in regional economic development -- Explaining differences in regional economic development in the absence of differences in natural advantage and governance -- Imperfect competition due to increasing returns to scale -- Home market effect -- Core-periphery model -- Input-output linkages -- Increasing spatial fragmentation of firms and the role of communication costs -- Long-term developments in the costs of trade and transport -- Empirical assessment of the effects of transport costs on regional development -- Economic impact studies -- Econometric studies on the effects of air transport on economic development -- European regional policy -- Conclusions -- Note -- References -- 3 A review of connectivity utility models and their applications -- Introduction -- A review of the Connectivity Utility Model -- The construction of the direct air connectivity measure -- The construction of indirect air connectivity measure -- The construction of a multi-modal connectivity measure -- Applications of the Connectivity Utility Model -- China's direct air connectivity with other countries/economies -- China's overall connectivity (the sum of direct and indirect connectivity) -- Using the extended ConnUM for vulnerability analysis -- Conclusions -- Notes -- References -- 4 Wider economic benefits: What they are, how they manifest, and an example from network air services -- Introduction -- Literature evolution -- Public capital and economic growth -- Mechanisms of WEB -- Wider economic benefits vs catalytic effects -- Wider economic benefits (WEBs) and aviation.