The international drivers of domestic airline mergers in twenty nations: integrating industrial organization and international business | Zendy

Clougherty Joseph A. | Zendy

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The international drivers of domestic airline mergers in twenty nations: integrating industrial organization and international business

Author(s) -

Clougherty Joseph A.

Publication year - 2005

Publication title -

managerial and decision economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.288

H-Index - 51

eISSN - 1099-1468

pISSN - 0143-6570

DOI - 10.1002/mde.1248

Subject(s) - factoring , competition (biology) , cournot competition , industrial organization , international trade , business , domestic market , incentive , international market , economics , international economics , market economy , microeconomics , accounting , ecology , biology

The domestic airline merger phenomenon of the late 1980s and early 1990s sparked a great deal of Industrial Organization (IO) literature; yet, that literature neglected non‐US domestic mergers and potential for international competitive gains. Using an International Business perspective to complement an IO analysis, I argue that factoring international competitive incentives helps explain domestic airline merger activity. A Cournot model of airline competition illustrates that domestic mergers, via enhanced domestic networks and reduced domestic competition, generate international competitive gains. Further, empirical tests—using a structural equations approach on panel data covering interhyphen‐national city‐pair market segments—support domestic mergers improving international competitiveness. Copyright © 2006 John Wiley & Sons, Ltd.

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