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 international city-pair market segments - support domestic mergers improving international competitiveness.
ASJC Scopus subject areas
- Business and International Management
- Strategy and Management
- Management Science and Operations Research
- Management of Technology and Innovation