 Does competition increase quality? Evidence from the US airline industryRicard Gil and Myongjin Kim International Journal of Industrial Organization, 2021, vol. 77, issue C Abstract: This paper studies the impact of competition on quality provision in the US airline industry exploiting a novel source of exogenous variation in competition. While mergers among market incumbents may stifle competition, a merger may increase the probability of entry if the merging airlines were not operating prior to merger in the market but each of them had presence at different route endpoints. We find non-merging incumbent airlines increase their flight frequency upon entry threat and accommodate entry of the newly merged airline by lowering flight frequency upon entry. While non-merging incumbents reduced arrival delays only upon entry of the newly merged airline, we find that incumbents decrease their cancelation rates and departure delays both upon merger announcement and entry of the newly merged airline. Our evidence suggests an increase in competition may increase consumer surplus, because non-merging incumbents increase quality and convenience, while keeping their prices unchanged. Keywords: Competition; Airlines; Quality; Flight frequency; On-time performance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:77:y:2021:i:c:s0167718721000357 DOI: 10.1016/j.ijindorg.2021.102742 Access Statistics for this article International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal More articles in International Journal of Industrial Organization from Elsevier |
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