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The international drivers of domestic airline mergers in twenty nations: integrating industrial organization and international business

  • Joseph A. Clougherty

    (Wissenschaftszentrum Berlin (WZB), Germany)

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 interhyphen-national city-pair market segments-support domestic mergers improving international competitiveness. Copyright © 2006 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 27 (2006)
Issue (Month): 1 ()
Pages: 75-93

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Handle: RePEc:wly:mgtdec:v:27:y:2006:i:1:p:75-93
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