The competitive effects of firm exit: evidence from the U.S. airline industry


Hüschelrath, Kai ; Müller, Kathrin


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URL: https://ub-madoc.bib.uni-mannheim.de/32319
URN: urn:nbn:de:bsz:180-madoc-323197
Document Type: Working paper
Year of publication: 2012
The title of a journal, publication series: ZEW Discussion Papers
Volume: 12-037
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: L40 , L93,
Keywords (English): Airline industry , exit , liquidation , merger , efficiencies , entry-inducing effects
Abstract: We study the competitive effects of five liquidations and six mergers in the domestic U.S. airline industry between 1995 and 2010. Applying fixed effects regression models we find that route exits due to liquidation lead to substantially larger price increases than mergerrelated exits. Within the merger category, our analysis reveals significant price increases on all affected routes immediately after the exit events. In the medium and long-run, however, realized merger efficiencies and entry-inducing effects are found to be strong enough to drive prices down to pre-exit levels.

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Hüschelrath, Kai ; Müller, Kathrin (2012) The competitive effects of firm exit: evidence from the U.S. airline industry. Open Access ZEW Discussion Papers Mannheim 12-037 [Working paper]
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