Airline horizontal mergers and productivity: Empirical evidence from a quasi-natural experiment in China

Jia Yan, Xiaowen Fu, Tae Hoon Oum, Kun Wang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

16 Citations (Scopus)

Abstract

The identification of possible efficiency gains is a core issue in the analysis of mergers. However, empirical studies are generally subject to bias caused by merger endogeneity. In the early 2000s, the Chinese government pursued a strategy of merging small firms in key industries to create large enterprise groups. Mergers created by this policy provide a rare quasi-natural experiment to investigate the effect of mergers. We take the opportunity to apply the difference-in-differences approach to identify the effect of mergers on the efficiency of Chinese airlines. Overall, our analysis suggests that the mergers increased the productivity of Chinese airlines.

Original languageEnglish
Pages (from-to)358-376
Number of pages19
JournalInternational Journal of Industrial Organization
Volume62
DOIs
Publication statusPublished - 1 Jan 2019
Externally publishedYes

Keywords

  • Airline mergers
  • Horizontal merger
  • Productive efficiency

ASJC Scopus subject areas

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

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