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Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry

Study of common ownership and ticket prices on US airline routes by Patrick Dennis, Kristopher Gerardi and Carola Schenone, published in The Journal of Finance in 2022.

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Dates
Sep 2022
Also known as
Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry, DGS paper
The debate

What it found

This paper reevaluates this evidence and shows that the documented positive correlation between common ownership and airline ticket prices stems from the market share component of the common ownership measure, and not the ownership and control components.1

Who disputes it

  • Einer Elhauge 2020

    But their claims are based on three modifications to the regression, none of which support their conclusion.2

    He answers a 2019 draft of the paper.
  • Isabel Tecu Sep 2021

    However, these studies do not support an affirmative conclusion that no such effects exist.3

    “These studies” are by Kennedy, O’Brien, Song and Waehrer, and by Dennis, Gerardi and Schenone, whose paper was then a working paper. Tecu is a co-author of the study they answer.
  • A Refutation of ‘Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry’ Aug 2022

    Contrary to DGS’ claims, ownership changes do predict price changes once one constructs a valid placebo that actually separates the variation from market shares from the variation in ownership.4

What it disputes

  • Anticompetitive Effects of Common Ownership Sep 2022

    We further show that the results are sensitive to measures of investor control and to assumptions about equity holders' ownership and control during bankruptcy.13

    The abstract says “prior research”. Isabel Tecu, a co-author of the 2018 study, names this paper among those answering it.

Each side is quoted in its own words. Whether a finding holds is not decided here.

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Timeline 8 dates
  1. 2020 Einer Elhauge disputes a finding of Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry According to Einer Elhauge
  2. Sep 2021 Isabel Tecu disputes a finding of Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry According to Isabel Tecu
  3. 2022 Carola Schenone authored Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry
  4. 2022 Kristopher Gerardi authored Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry
  5. 2022 Patrick Dennis authored Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry
  6. Aug 2022 A Refutation of ‘Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry’ disputes a finding of Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry According to A Refutation of ‘Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry’
  7. Sep 2022 Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry
  8. Sep 2022 Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry disputes a finding of Anticompetitive Effects of Common Ownership According to Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry
Proof 4 sources
  1. Common Ownership Does Not Have Anticompetitive Effects in the Airline Industry (The Journal of Finance, vol. 77, no. 5, 2022), Wiley, for the American Finance Association, 1 Sep 2022. Scholarship & press
    This paper reevaluates this evidence and shows that the documented positive correlation between common ownership and airline ticket prices stems from the market share component of the common ownership measure, and not the ownership and control components.
    We further show that the results are sensitive to measures of investor control and to assumptions about equity holders' ownership and control during bankruptcy.
    Prior research has shown that these institutional “common owners” induce anticompetitive pricing behavior in the airline industry.
  2. How Horizontal Shareholding Harms Our Economy—And Why Antitrust Law Can Fix It (Harvard Business Law Review, vol. 10, issue 2, 2020), Harvard Business Law Review, 2020. Scholarship & press
    But their claims are based on three modifications to the regression, none of which support their conclusion.
  3. “Anticompetitive Effects of Common Ownership” at Seven Years (Antitrust, vol. 36, no. 1, Fall 2021), American Bar Association, 2021. Scholarship & press
    However, these studies do not support an affirmative conclusion that no such effects exist.
    Dennis, Gerardi, and Schenone subsequently offered a similar conclusion in a paper provocatively titled “Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry” (DGS).
  4. A Refutation of ‘Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry’ (ECGI Finance Working Paper 837/2022), European Corporate Governance Institute, Aug 2022. Scholarship & press
    Contrary to DGS’ claims, ownership changes do predict price changes once one constructs a valid placebo that actually separates the variation from market shares from the variation in ownership.
Page history 1 change
  1. Sprint 12: State Street, disputing a finding, holders by filing dateAlibek5075dda

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