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Can mergers increase output? Evidence from the lodging industry
Author(s) -
Kalnins Arturs,
Froeb Luke,
Tschantz Steven
Publication year - 2017
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12172
Subject(s) - competition (biology) , revenue , economics , industrial organization , microeconomics , monetary economics , capacity utilization , simple (philosophy) , occupancy , business , finance , ecology , philosophy , epistemology , biology
We find that hotel mergers increase occupancy. In some specifications, price also rises. Because these effects occur only in markets with high capacity utilization and high uncertainty, we reject simple models of price or quantity competition in favor of models of “revenue management,” where firms price to fill available capacity in the face of uncertain demand.