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Bankruptcy and Product-Market Competition: Evidence from the Airline Industry

Posted: 24 Mar 2005 Last revised: 26 Oct 2012

Federico Ciliberto

University of Virginia - Department of Economics; Centre for Economic Policy Research (CEPR)

Carola Schenone

University of Virginia - McIntire School

Date Written: April 1, 2012

Abstract

We investigate the effects of Chapter 11 bankruptcy filings on product market competition using data from the US airline industry. We find: i) bankrupt airlines permanently downsize their national route structure, their airport-specific networks, and their route-specific flight frequency and capacity; ii) bankrupt airlines lower their route-specific prices while under bankruptcy protection, and increase them after emerging. We do not find robust evidence of significant changes by the bankrupt airline's competitors along any of the dimensions above.

Keywords: Airline Industry, Bankruptcy, Product Market Competition, Chapter 11

JEL Classification: G33, L13, L93, K2

Suggested Citation

Ciliberto, Federico and Schenone, Carola, Bankruptcy and Product-Market Competition: Evidence from the Airline Industry (April 1, 2012). International Journal of Industrial Organization, 30 (2012), pp. 564-577. Available at SSRN: https://ssrn.com/abstract=687404 or http://dx.doi.org/10.2139/ssrn.687404

Federico Ciliberto

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Carola Schenone (Contact Author)

University of Virginia - McIntire School ( email )

Charlottesville, VA 22903
United States
434-924-4184 (Phone)

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