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Market power, efficiencies, and entry: Evidence from an airline merger

Author

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  • Hüschelrath, Kai
  • Müller, Kathrin
Abstract
We investigate the competitive effects of the merger between Delta Air Lines and Northwest Airlines (2009) in the domestic U.S. airline industry. Applying fixed effects regression models we find that the transaction led to short term price increases of about 11 percent on overlapping routes and about 10 percent on routes which experienced a merger-induced switch of the operating carrier. Over a longer period, however, our analysis reveals that both merger efficiencies and post-merger entry by competitors initiated a downward trend in prices leaving consumers with a small net price increase of about 3 percent on the affected routes.

Suggested Citation

  • Hüschelrath, Kai & Müller, Kathrin, 2012. "Market power, efficiencies, and entry: Evidence from an airline merger," ZEW Discussion Papers 12-070, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:12070
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    References listed on IDEAS

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    Cited by:

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    2. Huubinh B. Le & Jules O. Yimga, 2023. "Slot Divestitures and Price Competition at Reagan National and LaGuardia," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(4), pages 321-340, June.

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    More about this item

    Keywords

    airline industry; merger; market power; efficiencies; entry-inducing effects;
    All these keywords.

    JEL classification:

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

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