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Merger Mania and Airline Fares

Author

Listed:
  • Richard V. Butler

    (Trinity University, San Antonio)

  • John H. Huston

    (Trinity University, San Antonio)

Abstract

The purpose of this paper is to distinguish the separate effects of actual and potential competition on fares using a more realistic and detailed representation of the latter than in previous studies. An investigation of routes involving the St. Louis hub demonstrates that routes with a hub at one end are less contestable than the (more competitive) through routes. These results imply that mergers of carriers sharing a hub will increase the fares paid by discretionary travelers to the hub, but that through fares (and unrestricted fares) are less affected.

Suggested Citation

  • Richard V. Butler & John H. Huston, 1989. "Merger Mania and Airline Fares," Eastern Economic Journal, Eastern Economic Association, vol. 15(1), pages 7-16, Jan-Mar.
    • Handle: RePEc:eej:eeconj:v:15:y:1989:i:1:p:7-16
    as

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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume15/V15N1P7_16.pdf
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    References listed on IDEAS

    as
    1. David R. Graham & Daniel P. Kaplan & David S. Sibley, 1983. "Efficiency and Competition in the Airline Industry," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 118-138, Spring.
    2. Moore, Thomas Gale, 1986. "U.S. Airline Deregulation: Its Effects on Passengers, Capital, and Labor," Journal of Law and Economics, University of Chicago Press, vol. 29(1), pages 1-28, April.
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    Cited by:

    1. Hüschelrath, Kai & Müller, Kathrin, 2012. "The competitive effects of firm exit: Evidence from the US airline industry," ZEW Discussion Papers 12-037, ZEW - Leibniz Centre for European Economic Research.
    2. Hüschelrath, Kai & Müller, Kathrin, 2013. "The competitive effects of firm exit," Economics of Transportation, Elsevier, vol. 2(2), pages 72-85.
    3. Richard Butler & John Huston, 1999. "The Meaning of Size: Output? Scope? Capacity? The Case of Airline Hubs," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(1), pages 51-64, February.

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