The competitive effects of firm exit: Evidence from the US airline industry

Kai Hüschelrath and Kathrin Müller
Authors registered in the RePEc Author Service: Kai Hueschelrath

No 12-037, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We study the competitive effects of five liquidations and six mergers in the domestic U.S. airline industry between 1995 and 2010. Applying fixed effects regression models we find that route exits due to liquidation lead to substantially larger price increases than mergerrelated exits. Within the merger category, our analysis reveals significant price increases on all affected routes immediately after the exit events. In the medium and long-run, however, realized merger efficiencies and entry-inducing effects are found to be strong enough to drive prices down to pre-exit levels.

Keywords: airline industry; exit; liquidation; merger; efficiencies; entry-inducing effects (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:12037

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