TY - JOUR
T1 - Mergers and organizational disruption
T2 - Evidence from the US airline industry
AU - González, Julia
AU - Lemus, Jorge
AU - Marshall, Guillermo
N1 - We thank Dan Bernhardt and George Deltas for valuable suggestions as well as conference participants at the Annual Meeting of the Midwest Econometrics Group and LACEA/LAMES 2016 for helpful comments. Guillermo Marshall is supported in part by funding from the Social Sciences and Humanities Research Council (Canada). All errors are our own.
We thank Dan Bernhardt and George Deltas for valuable suggestions as well as conference participants at the Annual Meeting of the Midwest Econometrics Group and LACEA/LAMES 2016 for helpful comments. Guillermo Marshall is supported in part by funding from the Social Sciences and Humanities Research Council (Canada). All errors are our own.
PY - 2024/1/1
Y1 - 2024/1/1
N2 - Merger-specific efficiencies alleviate anticompetitive concerns of horizontal mergers. However, organizational challenges inherent in mergers pose a threat to achieving these efficiencies and could negatively impact the merged firm's productivity and market outcomes. We separately measure the organizational and strategic effects of mergers on quality provision using administrative data from the US airline industry, leveraging an industry-specific regulation. We find that organizational challenges (e.g., combining workforces) cause a significant reduction in the quality supplied by a merged firm. In contrast, strategic effects (e.g., market strategy) have a minor impact on quality. Also, we find that a merger can reduce the performance of both merging firms. Our results suggest a merger's organizational challenges create uncertain efficiency gains.
AB - Merger-specific efficiencies alleviate anticompetitive concerns of horizontal mergers. However, organizational challenges inherent in mergers pose a threat to achieving these efficiencies and could negatively impact the merged firm's productivity and market outcomes. We separately measure the organizational and strategic effects of mergers on quality provision using administrative data from the US airline industry, leveraging an industry-specific regulation. We find that organizational challenges (e.g., combining workforces) cause a significant reduction in the quality supplied by a merged firm. In contrast, strategic effects (e.g., market strategy) have a minor impact on quality. Also, we find that a merger can reduce the performance of both merging firms. Our results suggest a merger's organizational challenges create uncertain efficiency gains.
UR - http://www.scopus.com/inward/record.url?scp=85173494244&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85173494244&partnerID=8YFLogxK
U2 - 10.1111/jems.12560
DO - 10.1111/jems.12560
M3 - Article
AN - SCOPUS:85173494244
SN - 1058-6407
VL - 33
SP - 111
EP - 130
JO - Journal of Economics and Management Strategy
JF - Journal of Economics and Management Strategy
IS - 1
ER -