Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5078029 | International Journal of Industrial Organization | 2012 | 14 Pages |
We investigate the effects of Chapter 11 bankruptcy filings on product market competition using data from the US airline industry. We find: i) bankrupt airlines permanently downsize their national route structure, their airport-specific networks, and their route-specific flight frequency and capacity; ii) bankrupt airlines lower their route-specific prices while under bankruptcy protection, and increase them after emerging. We do not find robust evidence of significant changes by the bankrupt airline's competitors along any of the dimensions above.
⺠We measure effects of bankruptcy filings on competition in the US airline industry. ⺠Bankrupt airlines permanently downsize networks, flight frequency, and market capacity. ⺠Bankrupt airlines lower their prices while under bankruptcy protection. ⺠Bankrupt airlines increase their prices after emerging from bankruptcy protection. ⺠No robust evidence of significant changes by the bankrupt airline's competitors.