John E. Kwoka, Steven A. Morrison, Zhongmin Wang
Date of Award
Doctor of Philosophy
Department or Academic Unit
College of Social Sciences & Humanities, Department of Economics
economics, marketing, market structure, cost structure
The first chapter is titled "Competition and Service Quality: New Evidence from the Airline Industry." This paper examines the relationship between competition and service quality in the airline industry. Using panel data and two different instrumental variable (IV) strategies, it directly addresses potential biases in previous studies. One of the IV strategies exploits changes in local market structure generated by a merger between two airlines that operate on a global scale. While this variation in market structure does not occur in a controlled environment, its source, if not random, differs from the variation in market structure otherwise observed in the airline industry. The findings indicate the effect of competition on airline delays may be three times stronger than previous studies suggest. The validity of the merger as a source of exogenous variation is examined along several lines.
The second chapter is titled "Evidence on the Product Market Effects of the Merger between Delta and Northwest." This paper employs a difference-in-differences model to estimate the price effects of the merger between Delta Air Lines and Northwest Airlines on October 29, 2008. The transaction combined two of the largest air carriers in the U.S. The analysis focuses on markets where the change in horizontal market structure was substantial enough to raise competitive concerns under the horizontal merger guidelines of the U.S. Department of Justice and the Federal Trade Commission. While the focused nature of the analysis does not offer a complete assessment of the merger's competitive effects, the results are noteworthy in that they contrast earlier studies of airline mergers that have found anticompetitive price increases. The empirical analysis highlights the importance of not only accounting for shocks to supply and demand, but also accounting for differences in the way those shocks are transmitted to prices across treatment and control markets.
The third chapter is titled "The Cost Structure of Regional Transmission Organizations," a paper co-authored with John Kwoka. RTOs now cover well over one-half of customers and sales of electricity in the U.S. As they have expanded in geographic coverage and functional scope, controversies have arisen about their rapidly growing costs and overall effectiveness. We model their costs, exploiting the fact that the seven existing RTOs initiated their various functions at different points in time over their roughly ten-year history. Specifically, we investigate the costs of each of the market functions administered by RTOs, the relative costliness of different RTOs in performing the same functions, the possibility of learning economies from either their individual or industry-wide experience, and economies of scale over the sampled range of RTO "output." Our results confirm the importance of some of these factors but raise doubts about others, in all cases based on systematic modeling and data analysis.
Greenfield, Daniel, "Three essays in empirical industrial organization" (2011). Economics Dissertations. Paper 5. http://hdl.handle.net/2047/d20001086
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