The competitive effects of firm exit: Evidence from the US airline industry
We study the competitive effects of five liquidations and six mergers in the domestic U.S. airline industry between 1995 and 2010. Applying fixed effects regression models we find that route exits due to liquidation lead to substantially larger price increases than mergerrelated exits. Within the merger category, our analysis reveals significant price increases on all affected routes immediately after the exit events. In the medium and long-run, however, realized merger efficiencies and entry-inducing effects are found to be strong enough to drive prices down to pre-exit levels.
|Date of creation:||2012|
|Contact details of provider:|| Postal: L 7,1; D - 68161 Mannheim|
Web page: http://www.zew.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Volodymyr Bilotkach, 2011. "Multimarket Contact and Intensity of Competition: Evidence from an Airline Merger," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(1), pages 95-115, January.
- John Kwoka & Evgenia Shumilkina, 2010. "The Price Effect Of Eliminating Potential Competition: Evidence From An Airline Merger," Journal of Industrial Economics, Wiley Blackwell, vol. 58(4), pages 767-793, December.
- Richard V. Butler & John H. Huston, 1989. "Merger Mania and Airline Fares," Eastern Economic Journal, Eastern Economic Association, vol. 15(1), pages 7-16, Jan-Mar.
- Kim, E Han & Singal, Vijay, 1993. "Mergers and Market Power: Evidence from the Airline Industry," American Economic Review, American Economic Association, vol. 83(3), pages 549-569, June.
- Jan K. Brueckner & Nichola J. Dyer & Pablo T. Spiller, 1992. "Fare Determination in Airline Hub-and-Spoke Networks," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 309-333, Autumn.
- Ciliberto, Federico & Schenone, Carola, 2012.
"Bankruptcy and product-market competition: Evidence from the airline industry,"
International Journal of Industrial Organization,
Elsevier, vol. 30(6), pages 564-577.
- Ciliberto, Federico & Schenone, Carola, 2010. "Bankruptcy and Product-Market Competition: Evidence from the Airline Industry," MPRA Paper 24914, University Library of Munich, Germany.
- Borenstein, Severin, 1990. "Airline Mergers, Airport Dominance, and Market Power," American Economic Review, American Economic Association, vol. 80(2), pages 400-404, May.
- Knapp, William, 1990. "Event Analysis of Air Carrier Mergers and Acquisitions," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 703-707, November.
- Meghan R. Busse, 2002. "Firm Financial Condition and Airline Price Wars," Yale School of Management Working Papers ysm281, Yale School of Management.
- Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
- Daraban, Bogdan & Fournier, Gary M., 2008. "Incumbent responses to low-cost airline entry and exit: A spatial autoregressive panel data analysis," Research in Transportation Economics, Elsevier, vol. 24(1), pages 15-24.
- Singal, Vijay, 1996. "Airline Mergers and Competition: An Integration of Stock and Product Price Effects," The Journal of Business, University of Chicago Press, vol. 69(2), pages 233-268, April. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:12037. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.