This paper studies airline network optimality. We modify existing models (Brueckner and Spiller (1991) and Zhang (1996)) to explain airline network optimality, using heterogeneity and different market sizes. Dropping small destinations from a hub-spoke network may increase overall profits and total welfare. But consumer surplus is always higher with a full network. This leads to a policy dilemma: the airline may want to drop smaller destinations, while the local economy benefits from these destinations. The level of substitution hardly has an effect.

中文翻译：

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产品差异化和网络优化

本文研究了航空公司网络的最优性。我们修改现有模型（Brueckner 和 Spiller (1991) 和 Zhang (1996)）来解释航空公司网络最优性，使用异质性和不同的市场规模。从中心辐射网络中删除小目的地可能会增加整体利润和总福利。但是，在完整的网络中，消费者剩余总是更高。这导致了一个政策困境：航空公司可能希望放弃较小的目的地，而当地经济则从这些目的地中受益。替代水平几乎没有影响。