Airline merger and competition in Japan: A conduct parameter and theoretical price approach

Abstract

In 2003, Japan Airlines and Japan Air System merged to become an equal rival to All Nippon Airways, which had significant market power in the domestic air transportation market in Japan. This paper examines the merger effects on the competition structure of the air transportation market using conduct parameter and theoretical price approaches. We test to see if the merger changed the market structure because there had been a leader–follower relationship among three carriers before the merger, and we had an equal competitor relationship between two carriers after the merger.