Bankruptcy and Product-Market Competition: Evidence from the Airline Industry

Federico Ciliberto and Carola Schenone

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate the effects of Chapter 11 bankruptcy filings on product market competition using data from the US airline industry. We find that bankrupt airlines permanently downsize their national route structure, their airport-specific networks, and their route-specific flight frequency and capacity. We also find that bankrupt airlines lower their route-specific prices while under bankruptcy protection, and increase them after emerging. We do not find robust evidence of significant changes by the bankrupt airline's competitors along any of the dimensions above. Overall, our results are consistent with the hypothesis that bankruptcy is the result of a war of attrition over capacity and network cutbacks.

Keywords: Airline Industry; Bankruptcy; Product Market Competition; Chapter 11; War of Attrition; Capacity Reduction (search for similar items in EconPapers)
JEL-codes: G3 K2 L1 (search for similar items in EconPapers)
Date: 2010-08-12
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://mpra.ub.uni-muenchen.de/24914/1/MPRA_paper_24914.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/25714/1/MPRA_paper_25714.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/38624/1/MPRA_paper_38624.pdf revised version (application/pdf)

Related works:
Journal Article: Bankruptcy and product-market competition: Evidence from the airline industry (2012)
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