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Airline networks, mergers, and consumer welfare

Author

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  • Hüschelrath, Kai
  • Müller, Kathrin

Abstract

We study the consumer welfare effects of mergers in airline networks. Based on the development of a general classification of affected routes, we apply a difference-indifferences 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 premerger overlap suggest that the merger led to a net increase in consumer welfare.

Suggested Citation

  • Hüschelrath, Kai & Müller, Kathrin, 2013. "Airline networks, mergers, and consumer welfare," ZEW Discussion Papers 13-028, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:13028
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    References listed on IDEAS

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    More about this item

    Keywords

    Airline industry; merger; market power; consumer welfare; price effects;

    JEL classification:

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

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