Krannert School of Business
Institutional Affiliation: Purdue University
NBER Working Papers and Publications
|January 2018||Endogenous and Selective Service Choices After Airline Mergers|
with Sophia Ying Li, Yongjoon Park, James W. Roberts, Andrew Sweeting, Jun Zhang: w24214
We estimate a model of service choice and price competition in airline markets, allowing for the carriers that provide nonstop service to be a selected subset of the carriers competing in the market. Our model can be estimated without an excessive computational burden and we use the estimated model to illustrate the effects of selection on equilibrium market structure and to show how accounting for selection can change predictions about post-merger market power and repositioning, in ways that are consistent with what has been observed after actual mergers, and possible merger remedies.