Dynamic efficiencies of the 1997 Boeing-McDonnell Douglas merger

摘要

We evaluate the welfare effects of the 1997 Boeing-McDonnell Douglas merger in the medium-sized, wide-body aircraft industry. We find that the merger led to lower prices. To explain the price drop, we develop a dynamic oligopoly game with learning-by-doing. We quantify the welfare effects of the merger by incorporating both increased market power and merger efficiencies from accelerated learning-by-doing. Our dynamic analysis indicates that net consumer surplus increased by as much as $5.14 billion, whereas a static model ignoring efficiencies of learning-by-doing predicts a $0.92 billion loss.