Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Monday, July 16, 2018

Endogenous and Selective Service Choices After Airline Mergers

By: Sophia Ying Li ; Joe Mazur ; Yongjoon Park ; James W. Roberts ; Andrew Sweeting ; and Jun Zhang study Endogenous and Selective Service Choices After Airline Mergers.

ABSTRACT: We estimate a model of service choice and price competition in airline markets, allowing for the carriers that provide nonstop service to be a selected subset of the carriers competing in the market. Our model can be estimated without an excessive computational burden and we use the estimated model to illustrate the effects of selection on equilibrium market structure and to show how accounting for selection can change predictions about post-merger market power and repositioning, in ways that are consistent with what has been observed after actual mergers, and possible merger remedies.

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