The Effects of Mergers on Prices, Costs, and Capacity Utilization in the U.S. Air Transportation Industry, 1970-84
AbstractWe analyze the effect of mergers on various aspects of airline performance during the period 1970-84, using a panel data set constructed by Caves et al. Estimates derived from a simple "matched pairs" statistical model indicate that these mergers were associated with reductions in unit cost. The average annual rate of unit cost growth of carriers undergoing merger was 1.1 percentage points lower, during the five-year period centered on the merger, than that of carriers not involved in merger. Almost all of this cost reduction appears to have been passed on to consumers. Part of the cost reduction is attributable to mergerrelated declines in the prices of inputs, particularly labor, but about two-thirds of it is due to increased total factor productivity. One source of the productivity improvement is an increase in capacity utilization (load factor).
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3197.
Date of creation: Dec 1989
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Publication status: published as Frank Lichtenberg, author, Corporate Takeovers and Productivity. Cambridge: MIT Press, forthcoming 1992, Chapter 8.
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Other versions of this item:
- Frank R. Lichtenberg & Moshe Kim, 1989. "The Effects of Mergers on Prices, Costs, And Capacity Utilization in the U.S. Air Transportation Industry, 1970-84," Economics Working Paper Archive wp_32, Levy Economics Institute.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Frank R. Lichtenberg & Donald Siegel, 1987. "Productivity and Changes in Ownership of Manufactoring Plants," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 643-684.
- Frank Lichtenberg & Donald Siegel, 1991.
"The Effect of Takeovers on the Employment and Wages of Central-Office and Other Personnel,"
NBER Working Papers
2895, National Bureau of Economic Research, Inc.
- Frank R Lichtenberg & Donald Siegel, 1989. "The Effect Of Takeovers On The Employment And Wages Of Central-Office And Other Personnel," Working Papers 89-3, Center for Economic Studies, U.S. Census Bureau.
- Lichtenberg, F.R. & Siegel, D., 1989. "The Effect Of Takeovers On The Employment And Wages Of Central-Office And Other Personnel," Papers fb-_89-05, Columbia - Graduate School of Business.
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