Endogenous and Selective Service Choices After Airline Mergers

Sophia Ying Li, Joe Mazur, Yongjoon Park, James W. Roberts, Andrew Sweeting and Jun Zhang

No 24214, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate a model of service choice and price competition in airline markets, allowing for the carriers that provide nonstop service to be a selected subset of the carriers competing in the market. Our model can be estimated without an excessive computational burden and we use the estimated model to illustrate the effects of selection on equilibrium market structure and to show how accounting for selection can change predictions about post-merger market power and repositioning, in ways that are consistent with what has been observed after actual mergers, and possible merger remedies.

JEL-codes: C31 C35 C54 L13 L4 L93 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-com, nep-ind and nep-tre
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