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Airline Networks, Mergers, and Consumer Welfare

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  • Kai Hüschelrath
  • Kathrin Müller

Abstract

We study the consumer welfare effects of mergers in airline networks. Based on the development of a general classification of affected routes, we apply a difference-in-differences approach to exemplarily investigate the price effects of the America West Airlines-US Airways merger completed in 2005. We find that although average prices increased substantially on routes in which both airlines competed either on a non-stop or one-stop basis prior to the merger, substantial average price reductions observed for routes without any pre-merger overlap suggest that the merger led to a net increase in consumer welfare. © 2013 LSE and the University of Bath

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  • Kai Hüschelrath & Kathrin Müller, 2014. "Airline Networks, Mergers, and Consumer Welfare," Journal of Transport Economics and Policy, University of Bath, vol. 48(3), pages 385-407, September.
    • Handle: RePEc:tpe:jtecpo:v:48:y:2014:i:3:p:385-407
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    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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