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Market Power, Efficiencies, and Entry Evidence from an Airline Merger

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  • Kai Hüschelrath
  • Kathrin Müller

Abstract

We investigate the competitive effects of the merger between Delta Air Lines and Northwest Airlines (2009) in the domestic US airline industry. Applying fixed‐effects regression models, we find that the transaction led to short‐term price increases of about 11% on overlapping routes and about 10% on routes that experienced a merger‐induced switch of the operating carrier. Over a longer period, however, our estimation results are consistent with the hypothesis that both merger efficiencies and postmerger entry by competitors initiated a downward trend in price, leaving consumers with a small net price increase of about 3% on the affected routes. Copyright © 2014 John Wiley & Sons, Ltd.

Suggested Citation

  • Kai Hüschelrath & Kathrin Müller, 2015. "Market Power, Efficiencies, and Entry Evidence from an Airline Merger," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 36(4), pages 239-255, June.
    • Handle: RePEc:wly:mgtdec:v:36:y:2015:i:4:p:239-255
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    Cited by:

    1. Le, Huubinh B. & Yimga, Jules O., 2023. "Codeshare restrictions as antitrust remedy," Transport Policy, Elsevier, vol. 138(C), pages 17-24.
    2. Huubinh B. Le & Jules O. Yimga, 2023. "Slot Divestitures and Price Competition at Reagan National and LaGuardia," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(4), pages 321-340, June.

    More about this item

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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