We consider a two-stage Cournot duopoly game with horizontally differentiated products where firms decide whether to improve transport technology or to activate product innovation. Transport technology increases the quantity sold in the market, while product innovation reduces product...

We adopt a vertical differentiation model to study the effect of deregulation in the airline industry. In particular, we show that traditional carriers form international alliances on hub-and-spoke networks to compete against low cost companies, which successfully serve short haul routes at...