The Competitive Effects of Firm Exit - Evidence from the U.S. Airline Industry
46 Pages Posted: 16 Jun 2012
Date Written: 2012
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.
Notes: Downloadable document is in German and English.
Keywords: Airline industry, exit, liquidation, merger, efficiencies, entry-inducing effects
JEL Classification: L40, L93
Suggested Citation: Suggested Citation