Mergers and Product Quality: Evidence from the Airline Industry
Yongmin Chen () and
Philip Gayle ()
MPRA Paper from University Library of Munich, Germany
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: Delta/Northwest and Continental/United. Consistent with the theoretical premise that mergers improve coordination but diminish competitive pressure for quality provision, we find: (i) each merger is associated with a quality increase in markets where the merging firms did not compete pre-merger, but with a quality decrease in markets where they did; and (ii) the quality change can be a U-shaped function of the pre-merger competition intensity.
Keywords: Mergers; Product Quality; Airlines (search for similar items in EconPapers)
JEL-codes: L13 L93 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind, nep-tid and nep-tre
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Journal Article: Mergers and product quality: Evidence from the airline industry (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:51238
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