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Airline horizontal mergers and productivity: Empirical evidence from a quasi-natural experiment in China

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  • Yan, Jia
  • Fu, Xiaowen
  • Oum, Tae Hoon
  • Wang, Kun

Abstract

The identification of possible efficiency gains is a core issue in the analysis of mergers. However, empirical studies are generally subject to bias caused by merger endogeneity. In the early 2000s, the Chinese government pursued a strategy of merging small firms in key industries to create large enterprise groups. Mergers created by this policy provide a rare quasi-natural experiment to investigate the effect of mergers. We take the opportunity to apply the difference-in-differences approach to identify the effect of mergers on the efficiency of Chinese airlines. Overall, our analysis suggests that the mergers increased the productivity of Chinese airlines.

Suggested Citation

  • Yan, Jia & Fu, Xiaowen & Oum, Tae Hoon & Wang, Kun, 2019. "Airline horizontal mergers and productivity: Empirical evidence from a quasi-natural experiment in China," International Journal of Industrial Organization, Elsevier, vol. 62(C), pages 358-376.
    • Handle: RePEc:eee:indorg:v:62:y:2019:i:c:p:358-376
    DOI: 10.1016/j.ijindorg.2018.01.004
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    More about this item

    Keywords

    Horizontal merger; Productive efficiency; Airline mergers;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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