The competitive effects of firm exit

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

Economics of Transportation, 2013, vol. 2, issue 2, 72-85

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 merger-related 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: 2013
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecotra:v:2:y:2013:i:2:p:72-85

DOI: 10.1016/j.ecotra.2013.05.001

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