EconPapers    
Economics at your fingertips  
 

Mergers and product quality: Evidence from the airline industry

Yongmin Chen () and Philip G. Gayle

International Journal of Industrial Organization, 2019, vol. 62, issue C, 96-135

Abstract: Retrospective studies of horizontal mergers have focused on their price effects, leaving the important question of how mergers affect product quality largely unanswered. This paper empirically investigates this issue for two recent airline mergers. Consistent with the theory that mergers facilitate coordination but diminish competitive pressure for quality improvement, we find that each merger is associated with a quality decrease (increase) in markets where the merging firms had (had no) pre-merger competition with each other, and the quality change can have a U-shaped relationship with pre-merger competition intensity. Consumer gains/losses associated with quality changes, which we monetize, are substantial.

Keywords: Mergers; Product quality; Airlines (search for similar items in EconPapers)
JEL-codes: L13 L40 L93 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718717301121
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Mergers and Product Quality: Evidence from the Airline Industry (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:62:y:2019:i:c:p:96-135

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
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-06-04
Handle: RePEc:eee:indorg:v:62:y:2019:i:c:p:96-135