1、Title：When Horizontal Merger Meets Vertical Integration? Evidence From the Airline Industry
Abstract: We explore the impact of the horizontal merger on vertically integrated market’s price.In U.S. airline industry, regional carriers cooperate with major carriers intensively either by contract or wholly owned by major carriers. Recently, the horizontal “merger wave” fundamentally reshaped the market structure of airline industry. We apply a two-dimensional difference in difference matching model to account for the possible composition change before and after the merger. Using the horizontal merger between American Airline and US Airways, we show the anticompetitive force dominates the efficiency gain and result in a significant ticket price increase for the merging carrier's vertically integrated partners. The subsidiary, which is more integrated into major's network, shows a larger price increase relative to the contracted independent carriers. Consumer foreclosure and input foreclosure effect are believed to be two major anticompetitive force in the upstream-downstream market structure. Although the airline industry usually is depicted as an industry with strong network effect, our results show the consumer foreclosure and input foreclosure effect still play an important role in driving up the ticket price.
2、Title：An Application of Genetic Matching to the US Airlines Merger
Abstract: This study estimates the impacts of the merger between US Airways and America West in 2005 on both vertical and horizontal measures of product differentiation. Applying the genetic matching algorithm, we construct a counterfactual group similar to US Airways and America West and then use the diff-in-diff method to identify the merger impacts. On vertical differentiation measures, our results show that the merger reduces arrival delay by about 1.3 minutes, and increases about 13 flights per route. On the other hand, the merging airlines reduce 23% of their routes and y to about 2 fewer destinations per route. For horizontal differentiation measures, we find that the merger reduces the gaps (in minutes) between flights, and does not have any significant impacts on other horizontal differentiation measures. To summarize, this is the first study to address the self-selection of a merger between two airlines by implementing the genetic matching method. Therefore, our results are statistically robust compared to the standard differences-in-differences method, which is generally used in the existing literature to estimate merger impacts.
3、Title：Regulation, Competition, and Price Dispersion: Evidence from the Airline Industry
Abstract: We investigate the impact of the government regulation (i.e., slot control policy) on price dispersion. Using carrier-route observations from 2006-2011 at Newark Liberty International Airport, we find that the government's attempt to reduce airport congestion results in an increase of price dispersion by 2%. The vertical differentiation channel is the primary mechanism through which the airlines are able to charge different prices to consumers who are willing to pay extra for high-quality flights. Our findings also indicate that competition is no longer an exogenous determinant of price dispersion when there is a change in the regulation. Due to the concerns of policy endogeneity, we apply a semi-parametric difference-in-difference model. Moreover, heterogeneity in parameters is apparent as monopolistic flights have the highest price dispersion.
4、Title：Quality Uncertainty, Price Competition and Horizontal Differentiation in the Airline Industry
Abstract: This project studies the relationship between product quality uncertainty and competition pattern. We consider a specific setting: the product quality has an inevitable quality uncertainty to the consumer but consumers have full information on the players in the market. Sellers compete on price, product quality and location simultaneously. The question we are interested in is when consumers have full information on the seller but have uncertainty on specific products, whether sellers are going to engage in more intensive price competition or will compete more intensively on horizontal differentiation (location). We test our theoretical model in the airline industry and find the quality uncertainty increases horizontal differentiation measured by Gini coefficient.
5. Title：Gender Wage Gap and Occupational Sorting Based on College Majors
Abstract: We are interested in the effect of college major on individuals' occupational choice. However, note that college major is a highly endogenous because of self-selection. Then, we extend the simple two choice model to multidimensional model where the both occupation and college majors will also have many categories.