The Impact of Mergers on Quality Provision: Evidence from the Airline Industry
34 Pages Posted: 3 Apr 2014 Last revised: 9 Oct 2015
Date Written: October 2015
We examine how mergers affect quality provision by analyzing five U.S. airline mergers, focusing on on-time performance (OTP). We find that airline mergers have minimal negative impacts on OTP, and likely result in long-run improvements due to efficiencies. Importantly, we show that this finding is not driven by post-merger changes in price that could affect on-time performance. Consequently, policymakers should not, as a rule, fear the negative quality effects of mergers, and may want to consider potential positive impacts on non-price dimensions, in addition to impacts on price, when assessing a proposed merger.
Keywords: Airlines, quality, on-time performance, mergers, antitrust
JEL Classification: L15, L41, L93
Suggested Citation: Suggested Citation