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Bridging Retrospective and Prospective Merger Analyses: The Case of US Airline Mergers

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  • Gaurab Aryal
  • Anirban Chattopadhyaya
  • Federico Ciliberto

Abstract

We begin with a retrospective analysis of three major U.S. airline mergers and document the sensitivity of the findings, particularly questioning whether market conditions evolve similarly for treated and control markets. We then develop a structural model that clarifies this and other assumptions implicit in retrospective analyses and separates efficiency gains from increases in firms' conduct. Using only pre-merger data, we propose a reduced-form approach that leverages exogenous changes in market structure to forecast merger effects. Finally, we use structural prospective merger simulations with our other estimates for a comprehensive evaluation. This bridging of approaches uncovers a fundamental tension: either efficiency gains were limited or, if they were significant, they were accompanied and offset by coordinated effects.

Suggested Citation

  • Gaurab Aryal & Anirban Chattopadhyaya & Federico Ciliberto, 2025. "Bridging Retrospective and Prospective Merger Analyses: The Case of US Airline Mergers," Papers 2503.15785, arXiv.org, revised Mar 2025.
    • Handle: RePEc:arx:papers:2503.15785
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