Strategic Behaviour in Network Industries
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Strategic Behaviour in Network Industries

A Multidisciplinary Approach

Ernst ten Heuvelhof, Martin de Jong, Mirjam Kars and Helen Stout

This in-depth book explains how institutional changes such as the privatization and liberalization of network industries, for example transport, energy or telecommunications, can frequently be disappointing. The expected benefits such as lower prices, innovation and better services fail to materialize, often because the number of competitors is low. The authors demonstrate how strategic actor behaviour of one or more of the firms involved can help explain these disappointing results.
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Chapter 5: The EU–US 2007 Open Skies Treaty

Ernst ten Heuvelhof, Martin de Jong, Mirjam Kars and Helen Stout


1 BACKGROUND: THE BILATERALS For many years, the transatlantic air traffic between Europe and the USA has been made possible by bilateral treaties which various European countries have entered into individually with the Americans. Some EU member states have signed a treaty with scope for market forces, whereas other member states have tried to resist market forces in the aviation sector and have signed restrictive treaties. These bilateral aviation treaties have become a common topic of discussion in recent years. The European Commission is fiercely opposed to them, arguing that they stand in the way of a level playing field in Europe. The EC is therefore demanding that they be terminated and replaced by one single treaty that confers equal rights on all airlines in the Community. In 2002, the Commission’s standpoint was endorsed by the European Court of Justice, when it ruled on an action taken against a number of member states for infringement of Community law (Art. 226 EC Treaty).2 In the same ruling, the Court confirmed the Commission’s powers in the matter. When the EC obtained a mandate to negotiate with the USA, also on behalf of the member states, the legal problems seemed to have been solved. The rights and obligations of the EC and the member states were crystal clear. However, legal coordination does not necessarily spell the end of recalcitrant practices. The aviation sector is complex and dynamic. To begin with, the airlines have considerable economic interests in transatlantic air transport. Secondly, the...

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