| Merger has significant impact on industries and has always been one of the hot research topics in the field of economic theory and practices.Horizontal merger is an important type of merger.According to economic theory,horizontal mergers significantly increase the market share of acquiring companies,and even cause monopoly behavior,leading to rising market prices and less market competition.At the same time,horizontal mergers can reduce operating costs and improve operational efficiency by integrating resources to achieve economies of scale in production.Especially when there is sufficient competition in the market,horizontal mergers will not harm market competition and consumer welfare.Given the significant impact of horizontal merger on market competition and consumer welfare,it is important to study the economic effects of horizontal mergers.Mergers in the civil aviation sector are an important manifestation of horizontal mergers.In 2010,two large-scale mergers took place in the Chinese civil aviation market.China Eastern Airlines acquired Shanghai Airlines;subsequently,Air China acquired Shenzhen Airlines.These two mergers further strengthened the monopoly position of China Eastern Group and Air China Group,significantly increased the concentration of China’s civil aviation market and local and private airlines were further marginalized,which has brought far-reaching influence to the Chinese civil aviation market.As the world’s second largest civil aviation market,the Chinese civil aviation market has also affected the international civil aviation market.However,the current academic research on the impact of these two mergers is relatively scarce,especially the merger between Air China and Shenzhen Airlines,has not been studied in the literature.The purpose of this paper is to use statistical and quantitative methods to empirically compare and analyze the impact of the two mergers on the Chinese civil aviation market and the international civil aviation market,and to explore the economic effects of horizontal mergers among Chinese airlines.Based on panel data covering ten years,this dissertation uses two “quasi-natural experiments”—the merger between China Eastern Airlines and Shanghai Airlines,and the merger between Air China and Shenzhen Airlines to analyze economics effects.Using difference-in-differences model,nested logit model,and consumer welfare model,as well as classical methodology such as fixed-effect regression,instrumental regression,and difference GMM regression,this dissertation comprehensively investigates the economic effects of Chinese civil aviation mergers.The empirical analysis in this dissertation consists of five parts.The first part(Chapter 3)gives an overview of the current situation of the Chinese civil aviation market,and uses the Herfindahl-Hirschman index and the Lerner index to describe and analyze the market power of airlines.Subsequently,from the perspectives of the total assets,total liabilities,net profit,fleet size,revenue passenger kilometers,total transportation turnover,and flight shifts,the changes in the operation data of China Eastern and Air China are listed before and after the mergers.Chapter 4 studies the impact of mergers on the international competitiveness of airlines.Based on the quarterly panel data from the second quarter of 2007 to the fourth quarter of 2016,with the use of the differernce-in-differences model,random effect regression,fixed effect regression,and instrumental regression,the chapter empirically analyzes the impact of mergers on airlines’ international competitiveness.Chapter 5 studies the impact of mergers on airline fares.Based on the quarterly panel data from the second quarter of 2007 to the fourth quarter of 2016,based on the further classification of route types,with the use of difference-in-differences model,random effect regression and fixed effect regression,this chapter empirically compares the effect of the two mergers on airfare.With the consideration of the lagging effect,this chapter also compares the different price effects of the two mergers in the short-term and long-term.Chapter 6 studies the multi-market contact effect of the two mergers.Based on the data of Chapter 5,this chapter first calculates two classic multi-market contact indicators.With the use of random effects regression,fixed-effect regression and difference GMM regression,this chapter empirically analyzes the impact of multi-market contact on the collusive behavior among airlines.Based on route classification according to different profit amounts,this chapter further empirically analyzes the impact of multi-market contacts on airlines’ different profitable routes.Chapter 7 studies the consumer welfare effects of the two mergers.Based on the data in Chapter 6,this chapter also involves the data of airline business-class passengers from the second quarter of 2007 to the fourth quarter of 2016.With the adoption of nested Logit model and consumer welfare model and the use of instrumental regression and fixed-effect regression,this chapter empirically analyzes the different impacts of the two mergers on consumer welfare of China Eastern Group and Air China Group.The main conclusions of this dissertation are as follows:First,the Herfindahl-Hirschman index and the Lerner index both show that the two mergers have significantly increased the market power of China Eastern Group and Air China Group in the domestic and international markets.In the domestic market,the increase in market power is greater than the increase in market power in the international market.Second,the results of benchmark regression and robustness tests show that the two mergers have not significantly improved the competitiveness of Air China,China Eastern,Shanghai Airlines and Shenzhen Airlines in the international market.Factors that have a significant positive impact on airlines’ international competitiveness include lower fares,higher punctuality rates,higher quality of service,and access to the three major international airline alliances.Third,the two mergers have significantly caused the increase in the price of related routes of China Eastern and Air China in the domestic market.Moreover,in the short-term,the merger of China Eastern Airlines and Shanghai Airlines(merger on overlapping routes)caused a large price increase on related routes;but in the long run,the merger of China International Airlines and Shenzhen Airlines(merger on complementary routes)caused more price increase.Fourth,the two mergers have significantly caused an increase in multi-market contact between airlines.Despite the use of simple counting multi-market contact indicators does not lead to collusive behavior,however,in the regression of the profit-weighted multi-market contact indicator,it was found that the increase in multi-market contact led to a significant increase in collusive behavior among airlines.After classifying the routes based on the route profit amount,it was also found that on the routes with higher profits(the top 25%),multi-market contact between airlines caused price conspiracy.Fifth,the estimation of the utility function and the demand function found that the product attribute that has the greatest impact on the utility of airline economy-class passengers is the price of the product;and the product attribute that has the greatest impact on the utility of airline business-class passengers is the frequency of the product.Estimatimation of the consumer welfare function found that both the two mergers caused losses in consumer welfare in the relevant market,mainly due to higher market fares or lower flight frequencies.After further dividing the relevant market,it was found that the overlapping routes,the routes connecting the cities of the three major aviation hub airports(Beijing,Shanghai,Guangzhou),and routes with low HHI of Air China-Shenzhen Airlines merger caused greater consumer surplus loss than China Easten-Shanghai Airlines merger.The contributions of the dissertion are as follows.First of all,regarding to research subject,civil aviation mergers,as an important form of horizontal mergers,has always been an important economic issue for foreign scholars.However,the research in China is relatively scarce.As the second largest civil aviation market in the world,the civil aviation market in China has a far-reaching impact on the Chinese civil aviation market and the international civil aviation market.It is a problem worthy of study.The subject of this dissertation focuses on the economic effects of Chinese civil aviation mergers,and has enriched and supplemented the economic research of civil aviation mergers at home and abroad.Secondly,regarding to research method,the current literature on civil aviation mergers is basically qualitative analysis.Based on the panel data covering ten years,this disseration uses the classical models and methodologies to comprehensively analyze the economic effect of Chinese civil aviation mergers for the first time.It is a breakthrough and improvement from existing research.Thirdly,regarding to research perspective,the existing literature on China’s civil aviation mergers only focused on the merger between China Eastern Airlines and Shanghai Airlines,and they only investigated the price effect of mergers.This disseration for the first time comprehensively analyzes the economic effects of the merger between China Eastern Airlines and Shanghai Airlines and the merger between Air China and Shenzhen Airlines.In addition to the price effect and the market power effect,this dissertation also studies the impacts of the mergers on international competitiveness,multi-market contact and consumer welfare effect,and has made important enrichment and supplement to the existing research.The research perspective is novel and more extensive.Fourth,regarding to research data,the existing research always uses the data of the route level when it comes to the passenger traffic data of the Chinese civil aviation market.Without the use of airline-route level data,it is unable to analyze competitive behavior among airlines.When it comes to the fare data of the Chinese civil aviation market,the average fare of different classes published on the ticket sales website such as Ctrip or the reference price of the CAAC is used instead of the real price.This leads to inaccuracy of the empirical results.The panel data used in this dissertation contains real fares and passenger traffic data at the airline-route level.The empirical results obtained in this disseration are more accurate and credible,and made an improvement to the existing research. |
