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Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry

74 Pages Posted: 2 Nov 2017 Last revised: 5 Feb 2018

Patrick J. Dennis

University of Virginia - McIntire School of Commerce

Kristopher Gerardi

Federal Reserve Bank of Atlanta

Carola Schenone

University of Virginia - McIntire School

Date Written: February 5, 2018

Abstract

Institutional investors often own significant equity in multiple firms competing within the same product markets. A recent debate among legal and financial scholars questions whether competitors with "common owners" engage in anti-competitive behavior. This paper questions the applicability of the theory of horizontal mergers and cross-ownership theory in the context of common ownership, and empirically analyzes the relationship between ticket prices and common ownership in the airline industry. In sharp contrast to the findings in Azar et.al. (2018), we find no evidence of such a relationship.

Keywords: Common Owners, Competition, Airlines

JEL Classification: G30, G34, G32, G38

Suggested Citation

Dennis, Patrick J. and Gerardi, Kristopher and Schenone, Carola, Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry (February 5, 2018). Available at SSRN: https://ssrn.com/abstract=3063465 or http://dx.doi.org/10.2139/ssrn.3063465

Patrick J. Dennis

University of Virginia - McIntire School of Commerce ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States
804-924-4050 (Phone)

Kristopher S. Gerardi

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
404-498-8561 (Phone)

HOME PAGE: http://sites.google.com/site/kristophergerardishomepage/

Carola Schenone (Contact Author)

University of Virginia - McIntire School ( email )

Rouss and Robertson Halls
125 Ruppel Drive
Charlottesville, VA 22903
United States
434-924-4184 (Phone)

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