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An Empirical Analysis of a Merger between a Network and Low-Cost AirlinesXavier FagedaUniversity of Barcelona - Department of Economic Policy Jordi PerdigueroAutonomous University of Barcelona - Department of Applied Economics May 17, 2011 XREAP No. 2011-01 Abstract: We use a difference-in-difference estimator to examine the effects of a merger involving three airlines. The novelty lies in the examination of this operation in two distinct scenarios: (1) on routes where two low-cost carriers and (2) on routes where a network and one of the low-cost airlines had previously been competing. We report a reduction in frequencies but no substantial effect on prices in the first scenario, while in the second we report an increase in prices but no substantial effect on frequencies. These results may be attributed to the differences in passenger types flying on these routes.
Number of Pages in PDF File: 32 Keywords: Mergers, Airline Market, Low-Cost Carriers, Difference-in-Difference JEL Classification: L93, L41, L44 working papers seriesDate posted: May 23, 2011 ; Last revised: May 27, 2011Suggested CitationContact Information
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