Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/23462 
Authors: 
Year of Publication: 
2003
Series/Report no.: 
CSIO Working Paper No. 0033
Publisher: 
Northwestern University, Center for the Study of Industrial Organization (CSIO), Evanston, IL
Abstract: 
This paper uses merger simulations to predict post-merger prices for six major airline mergers from the 1980?s, and compares these predictions with actual post-merger prices. Simulations which incorporate varying degrees of post-merger information allow us to decompose the actual price changes into its component effects. The results suggest that standard simulation methods, which measure the effect of the ownership transfer on pricing incentives, can account for a large component of the post-merger price change, but should not be expected to account for all of it. Changes in marginal cost or firm conduct generally account for most of the remainder, while post-merger entry and changes in observed and unobserved demand-side variables typically have a relatively small effect. A comparison of two alternative demand models indicates that the crossprice elasticities, and hence simulated prices, are quite sensitive to the demand specification.
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.