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Market power, efficiencies, and entry: Evidence from an airline merger

Kai Hüschelrath and Kathrin Müller
Authors registered in the RePEc Author Service: Kai Hueschelrath

No 12-070, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We investigate the competitive effects of the merger between Delta Air Lines and Northwest Airlines (2009) in the domestic U.S. airline industry. Applying fixed effects regression models we find that the transaction led to short term price increases of about 11 percent on overlapping routes and about 10 percent on routes which experienced a merger-induced switch of the operating carrier. Over a longer period, however, our analysis reveals that both merger efficiencies and post-merger entry by competitors initiated a downward trend in prices leaving consumers with a small net price increase of about 3 percent on the affected routes.

Keywords: airline industry; merger; market power; efficiencies; entry-inducing effects (search for similar items in EconPapers)
JEL-codes: L40 L93 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-bec, nep-com, nep-hme, nep-ind and nep-tid
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Journal Article: Market Power, Efficiencies, and Entry Evidence from an Airline Merger (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:12070

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