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http://ssrn.com/abstract=2084716
 
 

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The Competitive Effects of Firm Exit - Evidence from the U.S. Airline Industry


Kai Hüschelrath


Centre for European Economic Research (ZEW)

Kathrin Mueller


Centre for European Economic Research (ZEW)

2012

ZEW - Centre for European Economic Research Discussion Paper No. 12-037

Abstract:     
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 merger-related 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.

Note: Downloadable document is in German and English.

Number of Pages in PDF File: 46

Keywords: Airline industry, exit, liquidation, merger, efficiencies, entry-inducing effects

JEL Classification: L40, L93

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Date posted: June 16, 2012  

Suggested Citation

Hüschelrath, Kai and Mueller, Kathrin, The Competitive Effects of Firm Exit - Evidence from the U.S. Airline Industry (2012). ZEW - Centre for European Economic Research Discussion Paper No. 12-037. Available at SSRN: http://ssrn.com/abstract=2084716 or http://dx.doi.org/10.2139/ssrn.2084716

Contact Information

Kai Hüschelrath (Contact Author)
Centre for European Economic Research (ZEW) ( email )
P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany
Kathrin Mueller
Centre for European Economic Research (ZEW) ( email )
P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany
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