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The international drivers of domestic airline mergers in twenty nations: integrating industrial organization and international business

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  • Joseph A. Clougherty

    (Wissenschaftszentrum Berlin (WZB), Germany)

Abstract

The domestic airline merger phenomenon of the late 1980s and early 1990s sparked a great deal of Industrial Organization (IO) literature; yet, that literature neglected non-US domestic mergers and potential for international competitive gains. Using an International Business perspective to complement an IO analysis, I argue that factoring international competitive incentives helps explain domestic airline merger activity. A Cournot model of airline competition illustrates that domestic mergers, via enhanced domestic networks and reduced domestic competition, generate international competitive gains. Further, empirical tests-using a structural equations approach on panel data covering interhyphen-national city-pair market segments-support domestic mergers improving international competitiveness. Copyright © 2006 John Wiley & Sons, Ltd.

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  • Joseph A. Clougherty, 2006. "The international drivers of domestic airline mergers in twenty nations: integrating industrial organization and international business," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 75-93.
    • Handle: RePEc:wly:mgtdec:v:27:y:2006:i:1:p:75-93
    DOI: 10.1002/mde.1248
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    Cited by:

    1. Yimga, Jules, 2018. "Domestic code-sharing agreements and on-time performance: Evidence from the US airline industry," Transport Policy, Elsevier, vol. 71(C), pages 14-27.
    2. Joseph A. Clougherty & Anming Zhang, 2009. "Domestic rivalry and export performance: theory and evidence from international airline markets," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(2), pages 440-468, May.
    3. Y. I. Song & W. Woo & H. R. Rao, 2007. "Interorganizational information sharing in the airline industry: An analysis of stock market responses to code-sharing agreements," Information Systems Frontiers, Springer, vol. 9(2), pages 309-324, July.
    4. Yimga, Jules, 2017. "Airline on-time performance and its effects on consumer choice behavior," Research in Transportation Economics, Elsevier, vol. 66(C), pages 12-25.
    5. Yimga, Jules, 2022. "Code-sharing agreements and path quality in the US airline industry," Transport Policy, Elsevier, vol. 116(C), pages 369-385.
    6. Jules Yimga, 2023. "Multimarket Contact and Market Power Implications in the US Airline Industry," Networks and Spatial Economics, Springer, vol. 23(4), pages 985-1024, December.
    7. Melnik, Arie & Shy, Oz & Stenbacka, Rune, 2008. "Assessing market dominance," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 63-72, October.
    8. Ma, Wenliang & Zhang, Anming & Zhang, Yahua & Xu, Shiteng, 2021. "The growing influence of low-cost carriers in Northeast Asia and its implications for a regional single aviation market," Journal of Air Transport Management, Elsevier, vol. 91(C).
    9. Anming Zhang & Yimin Zhang & Joseph A. Clougherty, 2011. "Competition and Regulation in Air Transport," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 35, Edward Elgar Publishing.

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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