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The Price Effects of Mergers in Airline Networks

In: THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION

Author

Listed:
  • Kai Hüschelrath
  • Kathrin Müller

Abstract

We study the price effects of mergers in airline networks. Guided by a review of the existing theoretical and empirical literature, we develop two classifications of routes possibly affected by an airline merger. Subsequently, we apply a difference-in-differences 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 pre-merger overlap suggest that the merger led to a net increase in consumer welfare.

Suggested Citation

  • Kai Hüschelrath & Kathrin Müller, 2014. "The Price Effects of Mergers in Airline Networks," World Scientific Book Chapters, in: Martin Peitz & Yossi Spiegel (ed.), THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION, chapter 2, pages 31-57, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814616362_0002
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