IDEAS home Printed from https://ideas.repec.org/a/taf/rjapxx/v17y2012i3p464-475.html
   My bibliography  Save this article

A retrospective analysis of the effects of airline mergers on China Eastern's ‘lifeline’ routes: a difference-in-differences approach

Author

Listed:
  • Yahua Zhang

Abstract

We have seen a wave of mega airline mergers in the past few years including Air France/KLM, Delta/Northwest (NW) and United/Continental. However, literature examining the post-merger effects remains sparse. Using a difference-in-differences (DD) approach, this study examines the airfares on China Eastern's three ‘lifeline’ routes, Shanghai–Beijing, Shanghai–Guangzhou and Shanghai–Shenzhen, after the 2002 airline mergers that eliminated six state-owned airlines and resulted in three large airline groups. Passengers on these important routes seem to have not been adversely impacted, and even in 2007, the airfares were not significantly higher than that of the 2002 level despite the rise in fuel price, which may provide some evidence to support the 2009 merger between China Eastern and Shanghai Airlines and justify a lenient anti-trust treatment of mergers in China's airline industry. Retrospectively examining the actual effects of consummated mergers in China including this research has significant policy implications for the new Anti-Monopoly Law enforcement agencies that have little experience and knowledge in dealing with airline mergers and alliances at this stage.

Suggested Citation

  • Yahua Zhang, 2012. "A retrospective analysis of the effects of airline mergers on China Eastern's ‘lifeline’ routes: a difference-in-differences approach," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 17(3), pages 464-475.
    • Handle: RePEc:taf:rjapxx:v:17:y:2012:i:3:p:464-475
    DOI: 10.1080/13547860.2012.694701
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13547860.2012.694701
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13547860.2012.694701?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Joanna Stavins, 2001. "Price Discrimination in the Airline Market: The Effect of Market Concentration," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 200-202, February.
    2. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ho, Chun-Yu & McCarthy, Patrick & Wang, Yanhao, 2021. "Competition and countervailing power: Evidence from the China Eastern and Shanghai Airlines merger," Journal of Air Transport Management, Elsevier, vol. 91(C).
    2. Wang, Kun & Zhang, Anming & Zhang, Yahua, 2018. "Key determinants of airline pricing and air travel demand in China and India: Policy, ownership, and LCC competition," Transport Policy, Elsevier, vol. 63(C), pages 80-89.
    3. Chen, Chien-Hsun, 2023. "The Emergence of China’s Mergers and Acquisitions Market," MPRA Paper 116615, University Library of Munich, Germany.
    4. Suchi Kapoor Malhotra & Howard White & Nina Ashley O. Dela Cruz & Ashrita Saran & John Eyers & Denny John & Ella Beveridge & Nina Blöndal, 2021. "Studies of the effectiveness of transport sector interventions in low‐ and middle‐income countries: An evidence and gap map," Campbell Systematic Reviews, John Wiley & Sons, vol. 17(4), December.
    5. Ma, Wenliang & Wang, Qiang & Yang, Hangjun & Zhang, Yahua, 2020. "Evaluating the price effects of two airline mergers in China," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. M. J. Alhabeeb, 2020. "Price Discrimination as a Marketing Strategy," International Journal of Marketing Studies, Canadian Center of Science and Education, vol. 11(4), pages 1-1, March.
    2. Jean-Marc Siroën, 1993. "Marchés contestables, différenciation des produits et discrimination des prix," Revue Économique, Programme National Persée, vol. 44(3), pages 569-592.
    3. Peter Kuhn, 1982. "Malfeasance in Long Term Employment Contracts: A New General Model with an Application to Unionism," NBER Working Papers 1045, National Bureau of Economic Research, Inc.
    4. Shamsul Arifeen Khan Mamun, 2012. "Stochastic estimation of cost frontier: evidence from Bangladesh," Education Economics, Taylor & Francis Journals, vol. 20(2), pages 211-227, May.
    5. Makoto Yano, 2005. "Coexistence of large firms and less efficient small firms under price competition with free entry," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(3), pages 167-188, September.
    6. Boone, J., 2004. "Balance of Power," Other publications TiSEM d3f8cd4b-eaf0-4c1c-aed4-5, Tilburg University, School of Economics and Management.
    7. Benard, Jean, 1987. "Socialist incentive schemes and price planning," CEPREMAP Working Papers (Couverture Orange) 8735, CEPREMAP.
    8. Aslan, Hadiye & Kumar, Praveen, 2016. "The product market effects of hedge fund activism," Journal of Financial Economics, Elsevier, vol. 119(1), pages 226-248.
    9. Barrett, Sean D., 2004. "Bus Competition in Ireland - The Case for Market Forces," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2004(3-Autumn), pages 1-20.
    10. Milton Madison & James MacDonald & Michael Ollinger, 2000. "Technological Change and Economies of Scale in U.S. Poultry Slaughter," Working Papers 00-05, Center for Economic Studies, U.S. Census Bureau.
    11. Morlotti, Chiara & Redondi, Renato, 2023. "The impact of COVID-19 on airlines’ price curves," Journal of Air Transport Management, Elsevier, vol. 107(C).
    12. Dasgupta Utteeyo, 2011. "Are Entry Threats Always Credible?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-41, December.
    13. Boyan Jovanovic, 1993. "The Diversification of Production," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(1 Microec), pages 197-247.
    14. Bottasso, Anna & Conti, Maurizio & Vannoni, Davide, 2019. "Scale and (quasi) scope economies in airport technology. An application to UK airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 125(C), pages 150-164.
    15. Maria Lorek, 2013. "Des pôles de croissance vers des systèmes d’innovation territorialisés dans une « nouvelle » économie de marche : le cas de Gdansk, Pologne [The poles of growth and conversion of industrial territo," Working Papers 274, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.
    16. Subhash C. Ray & Shilpa Sethia, 2022. "Nonparametric measurement of potential gains from mergers: an additive decomposition and application to Indian bank mergers," Journal of Productivity Analysis, Springer, vol. 57(2), pages 115-130, April.
    17. Shi, Guanming & Stiegert, Kyle & Chavas, Jean Paul, 2010. "An Analysis of Pricing in Horizontal and Vertical Markets: The Case of the Cottonseed Market," Working Papers 201439, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    18. Maria José Gil-Moltó & Claudio A. Piga, 2007. "Entry and Exit in a Liberalised Market," Rivista di Politica Economica, SIPI Spa, vol. 97(1), pages 3-38, January-F.
    19. Thomaz Teodorovicz & Tainá Leandro & Luiz Alberto Esteves, 2016. "The Evolution Of A Methodology For Relevant Market Definition: An Analysis Of Cade'S Jurisprudence On Private Higher Educational Markets," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42nd Brazilian Economics Meeting] 137, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    20. Escobari, Diego, 2014. "Estimating dynamic demand for airlines," Economics Letters, Elsevier, vol. 124(1), pages 26-29.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rjapxx:v:17:y:2012:i:3:p:464-475. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rjap .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.