Market power, efficiencies, and entry: Evidence from an airline merger
AbstractWe investigate the competitive effects of the merger between Delta Air Lines and Northwest Airlines (2009) in the domestic U.S. airline industry. Applying fixed effects regression models we find that the transaction led to short term price increases of about 11 percent on overlapping routes and about 10 percent on routes which experienced a merger-induced switch of the operating carrier. Over a longer period, however, our analysis reveals that both merger efficiencies and post-merger entry by competitors initiated a downward trend in prices leaving consumers with a small net price increase of about 3 percent on the affected routes. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 12-070.
Date of creation: 2012
Date of revision:
airline industry; merger; market power; efficiencies; entry-inducing effects;
Find related papers by JEL classification:
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
- L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-06 (All new papers)
- NEP-BEC-2012-12-06 (Business Economics)
- NEP-COM-2012-12-06 (Industrial Competition)
- NEP-HME-2012-12-06 (Heterodox Microeconomics)
- NEP-IND-2012-12-06 (Industrial Organization)
- NEP-TID-2012-12-06 (Technology & Industrial Dynamics)
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