The Impact of Mergers on Quality Provision: Evidence from the Airline Industry

34 Pages Posted: 3 Apr 2014 Last revised: 9 Oct 2015

See all articles by Jeffrey Prince

Jeffrey Prince

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Daniel H. Simon

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Date Written: October 2015

Abstract

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

Prince, Jeffrey and Simon, Daniel H., The Impact of Mergers on Quality Provision: Evidence from the Airline Industry (October 2015). Indiana University, Bloomington School of Public & Environmental Affairs Research Paper No. 2419611; Kelley School of Business Research Paper No. 2014-03. Available at SSRN: https://ssrn.com/abstract=2419611 or http://dx.doi.org/10.2139/ssrn.2419611

Jeffrey Prince (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

Daniel H. Simon

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

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