A Political Economic Approach to the Domestic Airline Merger Phenomenon

Joseph Clougherty

Journal of Transport Economics and Policy, 2002, vol. 36, issue 1, 27-48

Abstract: The late 1980s witnessed a wave of cross-national domestic airline mergers that met with consistent antitrust policy approval. This paper explains the antitrust-review success of domestic airline mergers by focusing on international competitive effects. These promote the concurrence of private and public interest political forces behind lenient antitrust reviews, thus furthering political support for antitrust approval. The analysis extends Farrell and Shapiro's (1990) framework for analysing the national welfare merit of mergers, in order to encompass international competitive effects. A dual method (quantitative and qualitative) empirical strategy yields supporting evidence for the political economic hypothesis. © The London School of Economics and the University of Bath 2002

Date: 2002
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