Repositioning and Market Power After Airline Mergers

Abstract

We estimate a model of airline route competition in which carriers first choose whether to offer nonstop or connecting service and then choose prices. Carriers have full information about quality and marginal cost unobservables throughout the game, so that carriers choosing nonstop service will be selected. Accounting for selection when performing counterfactuals affects predictions about post-merger repositioning by rivals, likely price increases and the effectiveness of remedies, and allows the model to match observed changes after completed mergers..

Publication
RAND Journal of Economics
This work received the 2018 Robert F. Lanzillotti Prize for the best paper in antitrust economics in International Industrial Organization Conference.
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Yongjoon Park
Assistant Professor of Resource Economics Department

My research interests are IO and Environmental Economics.

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