Policy implications of the effects of concentration and multimarket contact in China's airline market

Zhang, Yahua and Round, David K. (2009) Policy implications of the effects of concentration and multimarket contact in China's airline market. Review of Industrial Organization, 34 (4). pp. 307-326. ISSN 0889-938X

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Abstract

Unlike many other mergers in developed countries, which might have been assessed and their effects estimated by antitrust authorities before being granted antitrust immunity, the airline mergers that swept China's airline industry in 2002 occurred with no antitrust challenge. These mergers provide the opportunity to study important market power issues in China's airline markets. Given that increased concentration and multimarket contact are the main legacies of an airline merger, the effects of mergers on these variables can raise the potential for the exercise of market power. However, an examination of the period 2002–2004 during which the Chinese airline mergers occurred shows that the resulting increased concentration and enhanced multimarket contact did not have important consequences for airfares in Chinese city-pair markets. The presence of Hainan Airlines appears to have played an important role in suppressing the airfares charged by China Eastern and China Southern.

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Item Type:	Article (Commonwealth Reporting Category C)
Refereed:	Yes
Item Status:	Live Archive
Additional Information:	Author's version deposited in accordance with the copyright policy of the publisher.
Faculty / Department / School:	Historic - Faculty of Business - School of Accounting, Economics and Finance
Date Deposited:	17 Sep 2009 23:39
Last Modified:	02 Jul 2013 23:24
Uncontrolled Keywords:	airline mergers; China; concentration; market power; multimarket contact
Fields of Research :	15 Commerce, Management, Tourism and Services > 1507 Transportation and Freight Services > 150701 Air Transportation and Freight Services 14 Economics > 1402 Applied Economics > 140209 Industry Economics and Industrial Organisation 14 Economics > 1402 Applied Economics > 140217 Transport Economics
Socio-Economic Objective:	B Economic Development > 88 Transport > 8803 Aerospace Transport > 880302 Air Passenger Transport
Identification Number or DOI:	10.1007/s11151-009-9215-2
URI:	http://eprints.usq.edu.au/id/eprint/5681

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