Chen, Yongmin and Gayle, Philip (2013): Mergers and Product Quality: Evidence from the Airline Industry.
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Abstract
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.
Item Type: | MPRA Paper |
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Original Title: | Mergers and Product Quality: Evidence from the Airline Industry |
Language: | English |
Keywords: | Mergers; Product Quality; Airlines |
Subjects: | L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L93 - Air Transportation |
Item ID: | 51238 |
Depositing User: | Dr Philip Gayle |
Date Deposited: | 05 Nov 2013 18:53 |
Last Modified: | 26 Sep 2019 23:27 |
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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/51238 |