Deregulation, contestability, and airline acquisitions

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

Research output: Contribution to journalArticle

20 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 languageEnglish (US)
Pages (from-to)231-251
Number of pages21
JournalJournal of Financial Economics
Volume30
Issue number2
DOIs
StatePublished - Dec 1991

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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