Airline networks, mergers, and consumer welfare
AbstractWe 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-indifferences 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 premerger overlap suggest that the merger led to a net increase in consumer welfare. --
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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 13-028.
Date of creation: 2013
Date of revision:
Airline industry; merger; market power; consumer welfare; price 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-2013-06-16 (All new papers)
- NEP-COM-2013-06-16 (Industrial Competition)
- NEP-NET-2013-06-16 (Network Economics)
- NEP-REG-2013-06-16 (Regulation)
- NEP-TRE-2013-06-16 (Transport Economics)
- NEP-URE-2013-06-16 (Urban & Real Estate Economics)
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