Are legacy airline mergers pro- or anti-competitive? Evidence from recent U.S. airline mergers |
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| Institution: | 1. University of Chicago, United States;2. NBER, United States;3. Compass Lexecon, United States;1. Civil Engineering Department, Universidad de Chile, Casilla 228-3, Santiago, Chile;2. Instituto de Economía, Pontificia Universidad Católica de Chile, Av. Vicuña Mackenna 4860, Santiago, Chile;1. Schulich School of Business, York University, Canada;2. Questrom School of Business, Boston University, USA |
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| Abstract: | Due to a series of recent mergers, the number of legacy airlines in the United States has decreased from six to three. We conduct a comprehensive investigation of the effect on fares and output of these legacy airline mergers to determine whether the mergers have had an overall pro-competitive or anti-competitive effect on consumers. Our difference-in-differences regression analysis shows that these mergers have been pro-competitive, with no significant adverse effect on nominal fares and with significant increases in passenger traffic as well as capacity. Taken together, the results indicate that the recent legacy mergers were pro-competitive. |
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