US domestic airline mergers: the neglected international determinants

The existing literature on domestic-airline mergers focuses on domestic competitive incentives determining merger behavior and neglects the impact of international competitive incentives. I argue that domestic airline mergers increase international efficiency - via the enhancement of domestic networks and the elimination of domestic competition - which correspondingly leads to an improved international competitive position. Comprehensive panel data - covering international airline markets between the US and twenty nations over the 1984-1992 period - allows testing this argument. The results support both domestic mergers and large domestic networks improving the international competitive position of airlines. (C) 2002 Elsevier Science B.V. All rights reserved.