Evaluating The Performance Of Merger Simulation: Evidence From The U.S. Airline Industry
- Topics:
- Mergers
- Tags:
- Finance,
- Industry,
- Investment,
- Merger,
- Mergers & Acquisitions,
- Performance,
- Social Science Electronic Publishing Inc.
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Overview: From the executive summary: ‘The paper uses merger simulations to predict post-merger prices for six major airline mergers and compares the predictions with actual post-merger prices. Simulations, which incorporate varying degrees of post-merger information, allow us to decompose the actual price changes into the component effects. The results suggest that standard simulation methods, which measure the effect of the ownership transfer on pricing incentives, can account for a large component of the post-merger price change, but should not be expected to account for all of it. Changes in marginal cost or firm conduct generally account for most of the remainder while post-merger entry and changes in observed and unobserved demand-side variables have relatively small effect.’
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Format: PDF | Size: 143KB | Date: Jan 2003 | Pages: 53
