Thursday, July 9, 2009
Posted by D. Daniel Sokol
Amalia Miller (Virginia - Econ) asks Did the Airline Tariff Publishing Case Reduce Collusion?
ABSTRACT: In December 1992, the US Department of Justice filed suit against eight major domestic airlines and the Airline Tariff Publishing Company in order to reduce opportunities for collusion in the industry. The lawsuit ended with consent decrees limiting the ability of airlines to communicate surreptitiously through the shared fare database. This paper measures the effects of the litigation and its settlement on industry performance, comparing changes in outcomes between market segments that were more and less likely to be affected by the ATP case. Prices fell in response to the investigation, but increased following the settlement, while the number of tickets sold in affected markets declined. The importance of multi-market contact also dropped and then recovered. The ATP case had at best a temporary effect on airline collusion.