Benefits and Costs of Airline Mergers: A Case Study

Dennis Carlton, William Landes () and Richard Posner

Bell Journal of Economics, 1980, vol. 11, issue 1, 65-83

Abstract: This paper provides a methodology to analyze the potential benefits and costs of airline mergers. The methodology is applied to the recent merger between North Central Airlines and Southern Airways -- the superior product created by a merger which increases the amount of single-carrier versus multiple-carrier service. A conditional logit model of travel demand is used to estimate the benefit of the introduction of a superior product. Our analysis of possible costs (in reduced competition) focuses on the definition of the market and the significance of potential competition.

Date: 1980
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