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

Abstract

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

Singal, Vijay, Airline Mergers and Competition: An Integration of Stock and Product Price Effects. J. OF BUSINESS, Vol. 69 No. 2, April 1996. Available at SSRN: https://ssrn.com/abstract=7207

Vijay Singal (Contact Author)

Virginia Tech ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States
5402317750 (Phone)

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