My research is centered in Applied Microeconomics, with policy-relevant applications in Industrial Organization, Law & Economics, and Corporate Finance. I am chiefly interested in the pricing, quality, and capital investment decisions of imperfectly competitive firms, and especially how their incentives are affected by legal and policy changes. My interests include the analysis of mergers and acquisitions, complementing my professional experience as a corporate financial analyst specializing in industrial M&A. Below I describe several active research projects.

The Dual Effects of Mergers on Peripheral Markets: Evidence from the U.S. Airline Industry (job market paper)

Myongjin Kim, Yongjoon Park, Joe Mazur, & Jangsu Yoon

Download PDF (This draft: 11/2023)

Can mergers have significant effects on markets where neither of the merging firms currently competes? Economic theory suggests as much, and references to such effects are common on both sides of the antitrust courtroom. Yet empirical support for a merger’s effects on these “peripheral” markets is all but missing. Using data on four large mergers in the U.S. airline industry, we provide the first empirical evidence of peripheral market effects, documenting considerable heterogeneity across markets. While these effects amount to a pro-competitive reduction in overall prices of 2% to 3% in our context, we establish theoretical and empirical support for both pro- and anti-competitive outcomes, as mediated by two distinct, often opposing, effects on the threat of entry: 1) an increase in the merged firm’s likelihood of entry, and 2) the merger’s elimination of a potential entrant. By providing a baseline estimate for both effects and offering insight into which markets are liable to be affected, our results are likely to be important for antitrust policy in general, and merger remedies in particular.

How Chapter 11 Changes the Game: Investment and Bankruptcy in the U.S. Airline
Industry (under review at Econometrica)

Joe Mazur

Download PDF (This draft: 12/2023)
Online Appendix

Although economists agree that insolvency policy influences capital investment, few models consider its impact on competitive strategy. Those that do tend to equate bankruptcy with liquidation, ignoring the restructuring and reemergence that commonly characterize Chapter 11 cases. Moreover, because the U.S. Bankruptcy Code permits abrogation of long-term contracts (e.g. for labor or capital) under Chapter 11, it provides otherwise constrained firms an opportunity to right-size, generating a non-financial link between investment and bankruptcy. To investigate this link and its implications for competitive strategy, I estimate a dynamic oligopoly game of investment and reorganization using data on the U.S. airline industry. Counterfactual simulations imposing a liquidation-only insolvency policy suggest that the option to reorganize under Chapter 11 increases capacity by up to 20%. I also find evidence that the last major reform of the U.S. Bankruptcy Code, in 2005, likely contributed to the “capacity discipline” widely observed in the industry thereafter.

Repositioning and Market Power After Airline Mergers

Sophia Ying Li, Joe Mazur, Yongjoon Park, James Roberts, Andrew Sweeting, & Jun Zhang
2022, RAND Journal of Economics, 53(1), 166-199.

Winner of the Robert F. Lanzillotti Prize for the Best Paper in Antitrust Economics, 2018 International Industrial Organization Conference

Download PDF (Accepted version: 07/2021)

We estimate a model of service choice and price competition in airline markets, allowing for the carriers that provide nonstop service to be a selected subset of the carriers competing in the market. Our model can be estimated without an excessive computational burden and we use the estimated model to illustrate the effects of selection on equilibrium market structure and to show how accounting for selection can change predictions about post-merger market power and repositioning, in ways that are consistent with what has been observed after actual mergers, and possible merger remedies.

Controlling for Entry Threat Effects in Merger Analysis

Myongjin Kim, Joe Mazur, & Yongjoon Park

2023 draft available upon request

Although peripheral markets (i.e. those in which neither of the merging firms currently competes) often comprise the control group in merger retrospectives, they can experience considerable merger-induced changes in the probability of new entry, which may in turn influence the accuracy and robustness of inference. Using data on four large mergers in the U.S. airline industry, we demonstrate the potential for incorrect and/or inconsistent inference when entry threat effects are ignored, and we provide a new approach to selecting the control group that yields more precise and more robust results.

Spillover Impacts of Airline Bankruptcy: Evidence from Housing Markets in Smaller Cities

Qi Ge, Donggeun Kim, Myongjin Kim, Joe Mazur, & Sean O’Connor

2022 draft available upon request

We match bankruptcy and shutdown episodes of regional airlines in the U.S. between 1995 and 2017 with a novel and comprehensive dataset on property transactions across the U.S. Our empirical findings confirm a spillover effect of airline bankruptcy on real estate prices. In particular, we find that cities between 60 and 100 miles from the closest regional airports experience a decrease in housing transaction prices in response to regional airlines’ bankruptcies. Furthermore, we find that the spillover effect is related to the ownership structure of the involved regional airlines, with the housing price response being much stronger under bankruptcy episodes from independently owned airlines compared to those that are wholly owned.

Can Product Market Competition Exacerbate Welfare Inequality? Evidence from the U.S. Airline Industry

Joe Mazur, Mouli Modak, & Brian Roberson

2023 draft available upon request

We investigate the relationship between income inequality and welfare as mediated through price discrimination in imperfectly competitive equilibrium. Because income inequality has the potential to influence the equilibrium set of products available to consumers, firms’ responses to it could work to ameliorate or exacerbate inequality in the distribution of welfare. We develop a theoretical model of a vertically and horizontally differentiated duopoly in which firms employ nonlinear pricing strategies. We find that income dispersion tends to increase overall welfare at the expense of excluding low-income types from the market, thereby amplifying the welfare consequences of income inequality. We then test this result on a novel and comprehensive data set of income and flight-schedule-level airline quality attributes.

Work in Progress

Subcontracting and Tacit Collusion in the Airline Industry

Silke Forbes, Donggeun Kim, Myongjin Kim, & Joe Mazur

Price Dispersion and the Threat of Entry: Incumbent Responses to U.S. Airline Mergers

Qi Ge, Myongjin Kim, & Joe Mazur

Optimal Capital Structure in Oligopolistic Equilibrium

Peter Hansen & Joe Mazur

A Comparison of Airline Quality Metrics

Myongjin Kim & Joe Mazur

Retired Projects

Price Distribution Effects of Airline Mergers

Joe Mazur, James Roberts, & Andrew Sweeting

Sensitivity Analysis in Merger Simulation

Joe Mazur

R&D vs. Physical Capital Investment under Collateral Constraints

Joe Mazur & Daniel Xu

Inconsistencies in Consumer Bankruptcy

Joe Mazur & Mason Reasner

This page last edited 2024-08-16.