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Endogenous and Selective Service Choices After Airline Mergers

Author

Listed:
  • Sophia Ying Li
  • Joe Mazur
  • Yongjoon Park
  • James W. Roberts
  • Andrew Sweeting
  • Jun Zhang

Abstract

We estimate a model of service choice and price competition in airline markets, allowing for the carriers that provide nonstop service to be a selected subset of the carriers competing in the market. Our model can be estimated without an excessive computational burden and we use the estimated model to illustrate the effects of selection on equilibrium market structure and to show how accounting for selection can change predictions about post-merger market power and repositioning, in ways that are consistent with what has been observed after actual mergers, and possible merger remedies.

Suggested Citation

  • Sophia Ying Li & Joe Mazur & Yongjoon Park & James W. Roberts & Andrew Sweeting & Jun Zhang, 2018. "Endogenous and Selective Service Choices After Airline Mergers," NBER Working Papers 24214, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24214
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    Cited by:

    1. Balat, Jorge F. & Han, Sukjin, 2023. "Multiple treatments with strategic substitutes," Journal of Econometrics, Elsevier, vol. 234(2), pages 732-757.
    2. Bet, Germán, 2021. "Product specification under a threat of entry: Evidence from Airlines’ departure times," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    3. Crawford, Gregory S. & Griffith, Rachel & Iaria, Alessandro, 2021. "A survey of preference estimation with unobserved choice set heterogeneity," Journal of Econometrics, Elsevier, vol. 222(1), pages 4-43.
    4. Gil, Ricard & Kim, Myongjin, 2021. "Does competition increase quality? Evidence from the US airline industry," International Journal of Industrial Organization, Elsevier, vol. 77(C).

    More about this item

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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