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http://ssrn.com/abstract=2179034
 
 

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Market Power, Efficiencies, and Entry - Evidence from an Airline Merger


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. 12-070

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.

Number of Pages in PDF File: 35

Keywords: Airline industry, merger, market power, efficiencies, entry-inducing effects

JEL Classification: L40, L93

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Date posted: November 23, 2012  

Suggested Citation

Hüschelrath, Kai and Mueller, Kathrin, Market Power, Efficiencies, and Entry - Evidence from an Airline Merger (2012). ZEW - Centre for European Economic Research Discussion Paper No. 12-070. Available at SSRN: http://ssrn.com/abstract=2179034 or http://dx.doi.org/10.2139/ssrn.2179034

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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