IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/8197.html
   My bibliography  Save this paper

An Empirical Investigation of the Competitive Effects of Domestic Airline Alliances

Author

Listed:
  • Gustavo E. Bamberger
  • Dennis W. Carlton
  • Lynette R. Neumann

Abstract

In this paper, we investigate empirically the effect of two recent domestic airline alliances. We find that both alliances benefited consumers - average fares fell and total traffic increased after the creation of the alliances on those city pairs affected by the alliances. We also find that these effects are found both on city pairs where the alliance created one or two new online carriers, and on city pairs where the alliance increased the service offered by one or both alliance partners. Finally, we find that the size of the fare effect of the alliance depends on the pre-alliance level of competition on a city pair with the effect being larger on those city pairs where the level of competition was relatively low.

Suggested Citation

  • Gustavo E. Bamberger & Dennis W. Carlton & Lynette R. Neumann, 2001. "An Empirical Investigation of the Competitive Effects of Domestic Airline Alliances," NBER Working Papers 8197, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:8197
    Note: IO
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w8197.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Park, Jong-Hun, 1997. "The effects of airline alliances on markets and economic welfare," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 33(3), pages 181-195, September.
    2. Evans, William N & Froeb, Luke M & Werden, Gregory J, 1993. "Endogeneity in the Concentration-Price Relationship: Causes, Consequences, and Cures," Journal of Industrial Economics, Wiley Blackwell, vol. 41(4), pages 431-438, December.
    3. Dennis W. Carlton & William M. Landes & Richard A. Posner, 1980. "Benefits and Costs of Airline Mergers: A Case Study," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 65-83, Spring.
    4. William N. Evans & Ioannis N. Kessides, 1994. "Living by the "Golden Rule": Multimarket Contact in the U. S. Airline Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 341-366.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gayle, Philip G. & Wu, Chi-Yin, 2013. "A re-examination of incumbents’ response to the threat of entry: Evidence from the airline industry," Economics of Transportation, Elsevier, vol. 2(4), pages 119-130.
    2. Brueckner, Jan K. & Lee, Darin & Singer, Ethan S., 2013. "Airline competition and domestic US airfares: A comprehensivereappraisal," Economics of Transportation, Elsevier, vol. 2(1), pages 1-17.
    3. Brueckner Jan K. & Picard Pierre M., 2013. "Airline Alliances, Carve-Outs and Collusion," Review of Network Economics, De Gruyter, vol. 12(2), pages 211-227, June.
    4. Volodymyr Bilotkach, 2019. "Airline Partnerships, Antitrust Immunity, and Joint Ventures: What We Know and What I Think We Would Like to Know," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(1), pages 37-60, February.
    5. Beckert, Walter & Mazzarotto, Nicola, 2010. "Price-concentration analysis in merger cases with differentiated products," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-23.
    6. Enrico Bachis & Claudio A. Piga, 2006. "Hub Premium, Airport Dominance and Market Power in the European Airline Industry," Rivista di Politica Economica, SIPI Spa, vol. 96(5), pages 11-54, September.
    7. Srabana Gupta, 2001. "The Effect of Bid Rigging on Prices: A Study of the Highway Construction Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 19(4), pages 451-465, December.
    8. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    9. Faouzi Bensebaa, 2003. "La dynamique concurrentielle:défis analytiques et méthodologiques," Revue Finance Contrôle Stratégie, revues.org, vol. 6(1), pages 5-37, March.
    10. Maria José Gil-Moltó & Claudio A. Piga, 2007. "Entry and Exit in a Liberalised Market," Rivista di Politica Economica, SIPI Spa, vol. 97(1), pages 3-38, January-F.
    11. Gerhard Clemenz & Klaus Gugler, 2009. "Locational choice and price competition: some empirical results for the austrian retail gasoline market," Studies in Empirical Economics, in: Giuseppe Arbia & Badi H. Baltagi (ed.), Spatial Econometrics, pages 223-244, Springer.
    12. Morrell, P.S & Pilon, R.V, 1999. "KLM and Northwest: a survey of the impact of a passenger alliance on cargo service characteristics," Journal of Air Transport Management, Elsevier, vol. 5(3), pages 153-160.
    13. Pham, Tho & Talavera, Oleksandr & Yang, Junhong, 2016. "Multimarket Competition and Profitability: Evidence from Ukrainian banking," MPRA Paper 72376, University Library of Munich, Germany.
    14. Marti­n, Juan Carlos & Román, Concepción, 2003. "Hub location in the South-Atlantic airline market: A spatial competition game," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(10), pages 865-888, December.
    15. Kendix, Michael & Walls, W.D., 2010. "Oil industry consolidation and refined product prices: Evidence from US wholesale gasoline terminals," Energy Policy, Elsevier, vol. 38(7), pages 3498-3507, July.
    16. Madeleine Besson & Bernard Bourdon, 2015. "Can multimarket competition theory explain why manufacturers are reluctant to adopt e-commerce ? The case of the French household appliances’ manufacturers," Grenoble Ecole de Management (Post-Print) hal-02387337, HAL.
    17. Rafael Moner Colonques & Ricardo Flores Fillol, 2006. "Strategic Effects Of Airline Alliances," Working Papers. Serie AD 2006-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    18. Javier Coronado & Sergi Jiménez-Martín & Pedro L Marín, 2007. "Multimarket Contact in Pharmaceutical Markets," Working Papers 303, Barcelona School of Economics.
    19. Steven Berry & Martin Gaynor & Fiona Scott Morton, 2019. "Do Increasing Markups Matter? Lessons from Empirical Industrial Organization," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 44-68, Summer.
    20. Böhme Enrico & Müller Christopher, 2011. "Searching for the Concentration-Price Effect in the German Movie Theater Industry," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(4), pages 479-493, August.

    More about this item

    JEL classification:

    • L - Industrial Organization

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:8197. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.