Airline Mergers and Competition: An Integration of Stock and Product Price Effects
J. OF BUSINESS, Vol. 69 No. 2, April 1996
Posted: 19 Apr 1998
While research using stock prices has rejected the hypothesis that market power is important in motivating horizontal mergers, studies of airfares find evidence consistent with a dominant role of market power in airline mergers. I integrate the two lines of research by examining the same set of airline mergers from a capital market viewpoint. Further, I link changes in the stock market to changes in the product market, presenting a dual market perspective. I conclude that airline mergers result in both increased market power and more efficient operations. This article has implications for antitrust policy.
JEL Classification: G34
Suggested Citation: Suggested Citation