Deregulation, contestability, and airline acquisitions

Myron B. Slovin; Marie Sushka; Carl D. Hudson

doi:10.1016/0304-405X(91)90031-E

Deregulation, contestability, and airline acquisitions

Myron B. Slovin, Marie Sushka, Carl D. Hudson

Finance

Research output: Contribution to journal › Article › peer-review

23 Scopus citations

Abstract

We test whether airline consolidations generate monopoly profits by examining returns to listed carriers around horizontal airline-acquisition bids and evaluating effects of industry concentration on share-price reactions. Under Civil Aeronautics Board (CAB) regulation, returns to targets, bidders, and rival carriers are positive functions of changes in concentration implied by bids. Changes in concentration after deregulation have no positive effect on carrier returns. These results support Jordan's (1970, 1972) hypothesis that CAB activities fostered carrier collusion. There is no evidence of monopoly gains from carrier consolidations after deregulation.

Original language	English (US)
Pages (from-to)	231-251
Number of pages	21
Journal	Journal of Financial Economics
Volume	30
Issue number	2
DOIs	https://doi.org/10.1016/0304-405X(91)90031-E
State	Published - Dec 1991

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics
Strategy and Management

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Deregulation, contestability, and airline acquisitions

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