The Price Effects of the Delta/Northwest Airline Merger

The Price Effects of the Delta/Northwest Airline Merger This paper examines the price effects of the merger between Delta Airlines and Northwest Airlines. Empirical analysis finds that, other things equal, the fares for airport-pairs where Delta and Northwest competed with each other prior to the merger did not increase by much following the merger. This result is consistent with the additional finding that the impact of changes in low-cost carrier competition is large while the effect of changes in competition from legacy carriers is slight. Since both Delta and Northwest Airlines are legacy carriers, the results for other legacies suggest that the merger should not have exerted a dramatic impact on fares. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

The Price Effects of the Delta/Northwest Airline Merger

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Publisher
Springer US
Copyright
Copyright © 2013 by Springer Science+Business Media New York
Subject
Economics / Management Science; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-013-9380-1
Publisher site
See Article on Publisher Site

Abstract

This paper examines the price effects of the merger between Delta Airlines and Northwest Airlines. Empirical analysis finds that, other things equal, the fares for airport-pairs where Delta and Northwest competed with each other prior to the merger did not increase by much following the merger. This result is consistent with the additional finding that the impact of changes in low-cost carrier competition is large while the effect of changes in competition from legacy carriers is slight. Since both Delta and Northwest Airlines are legacy carriers, the results for other legacies suggest that the merger should not have exerted a dramatic impact on fares.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Feb 28, 2013

References

  • Mergers and market power: Evidence from the airline industry
    Kim, EH; Singal, V
  • The price effect of eliminating potential competition: Evidence from an airline merger
    Kwoka, JE; Shumilkina, E

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