An Empirical Investigation of the Competitive Effects of Domestic Airline Alliances

31 Pages Posted: 24 Mar 2001  

Gustavo E. Bamberger

Lexecon, Inc.

Dennis W. Carlton

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Lynette R. Neumann

Compass Lexecon

Date Written: March 2001

Abstract

In this paper, we investigate empirically the effect of two recent domestic airline alliances. We find that both alliances benefited consumers - average fares fell and total traffic increased after the creation of the alliances on those city pairs affected by the alliances. We also find that these effects are found both on city pairs where the alliance created one or two new online carriers, and on city pairs where the alliance increased the service offered by one or both alliance partners. Finally, we find that the size of the fare effect of the alliance depends on the pre-alliance level of competition on a city pair with the effect being larger on those city pairs where the level of competition was relatively low.

Suggested Citation

Bamberger, Gustavo E. and Carlton , Dennis W. and Neumann, Lynette R., An Empirical Investigation of the Competitive Effects of Domestic Airline Alliances (March 2001). NBER Working Paper No. w8197. Available at SSRN: https://ssrn.com/abstract=264452

Gustavo E. Bamberger

Lexecon, Inc.

332 South Michigan Avenue
Suite 1300
Chicago, IL 60604
United States

Dennis W. Carlton (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
312-322-0215 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Lynette R. Neumann

Compass Lexecon

332 South Michigan Avenue
Suite 1300
Chicago, IL 60604
United States

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