The domestic airline merger phenomenon of the late 1980s and early 1990s sparked a great deal of Industrial Organization (IO) literature; yet, that literature neglected non-US domestic mergers and potential for international competitive gains. Using an International Business perspective to complement an IO analysis, I argue that factoring international competitive incentives helps explain domestic airline merger activity. A Cournot model of airline competition illustrates that domestic mergers, via enhanced domestic networks and reduced domestic competition, generate international competitive gains. Further, empirical tests - using a structural-equations approach on panel data covering international city-pair market segments - support domestic mergers improving international competitiveness.
ZUSAMMENFASSUNG - (Was die inländischen Fluglinien in 20 Ländern zur Fusion getrieben hat. Eine integrierte industrieökonomische und betriebswirtschaftliche Analyse des internationalen Wettbewerbs) In der Industrieökonomik hat das Phänomen von Fusionen inländischer Fluggesellschaften in den späten 1980er und frühen 1990er Jahren viel wissenschaftliche Literatur angeregt. Die einschlägigen Forschungsarbeiten behandeln jedoch ausschließlich inländische Fusionen in den U.S.A. und lassen damit den Aspekt des internationalen Wettbewerbs außer Acht. In dieser Untersuchung, die die industrieökonomische Analyse um die Perspektive der internationalen Betriebswirtschaft ergänzt, wird gezeigt, dass die Anreize des internationalen Wettbewerb in das Erklärungsmodell für nationale Fusionen von Fluglinien integriert werden können. Anhand eines Cournot-Modells des Wettbewerbs zwischen Fluggesellschaften kann dargelegt werden, wie Fusionen zu einem erweiterten inländischen Netz an Flugverbindungen und verminderten Konkurrenzdruck im Inland führen und so die Position der fusionierten Fluglinie im internationalen Wettbewerb stärken. Dieses Ergebnis wird von empirischen Tests, die eine Struckturvergleichsmethode für Paneldaten über einen internationalen Städtevergleich der Marktsegmente verwenden, gestützt.
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Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number
SP II 2005-06.
Length: 39 pages Date of creation: Apr 2005 Date of revision: Publication status: Published in Managerial and Decision Economics, Vol. 2006, pp. 75-93. Handle: RePEc:wzb:wzebiv:spii2005-06
Find related papers by JEL classification: L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets F14 - International Economics - - Trade - - - Country and Industry Studies of Trade L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
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References listed on IDEAS 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.:
Panzar, John C & Willig, Robert D, 1981.
"Economies of Scope,"
American Economic Review,
American Economic Association, vol. 71(2), pages 268-72, May.
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