My research is centered in Applied Microeconomics, with policy-relevant applications in Industrial Organization and Law & Economics.  I am chiefly interested in the pricing, quality, and capital investment decisions of firms that behave strategically, especially how their incentives are affected by legal and policy changes and market frictions.  My interests also extend to 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.


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.

Working Papers

The Dual Effects of Mergers on Peripheral Markets: Evidence from the U.S. Airline Industry

Myongjin Kim & Joe Mazur

Download PDF (Preliminary draft: 09/2022)

Using data on four large mergers in the U.S. airline industry, we find consistent and significant effects of mergers on peripheral markets (i.e. those in which neither of the merging firms currently competes). Although such markets are rarely the focus of antitrust analysis, we demonstrate that they can experience considerable merger-induced changes in the probability of new entry (“entry-threat” effects), which may in turn influence market performance. Moreover, this probability change may be positive, negative, or nil, as each market faces two distinct, often opposing, effects: an increase in the merged firm’s likelihood of entry, and the merger’s elimination of a potential entrant. Ours is the first study to decompose entry threat effects in this way, and we document considerable heterogeneity in both components across markets. Average prices are found to respond non-monotonically to changes in entry probability, with an overall reduction in price for these four mergers on the order of 2% to 3%. Our results have clear relevance for antitrust policy in general, and merger remedies in particular.

Controlling for Entry Threat Effects in Merger Analysis

Myongjin Kim & Joe Mazur

Download PDF (Preliminary draft: 09/2022)

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.

Duopoly Investment Behavior in the Presence of Chapter 11 Reorganization

Joe Mazur

Download PDF (This draft: 09/2022)

How does the prospect of Chapter 11 reorganization influence the capital  investment decisions of oligopolistic firms? Economists agree that bankruptcy policy matters for ex ante investment, yet most models either ignore the strategic  implications of this effect, or oversimplify bankruptcy by equating it with liquidation. Because Chapter 11 permits abrogation of long-term contracts (e.g. for labor or capital), it provides an otherwise constrained firm the opportunity to right-size and re-emerge, giving bankruptcy law an influence on firms’ ex ante investment behavior, with direct implications for their interactions with rivals. This paper analyzes the link between capital investment and reorganization using a straightforward dynamic duopoly game that highlights the role of investment (ir)reversibility. I show that an increase in the costs associated with Chapter 11 will tend to discipline ex ante behavior in equilibrium, curbing investment in periods of high demand and spurring the sale of capital when demand is low.

Can Stricter Bankruptcy Laws Discipline Capital Investment? Evidence from the U.S. Airline Industry

Joe Mazur

Download PDF (This draft: 09/2022)
Online Appendix

Because Chapter 11 reorganization permits abrogation of long-term contracts, it provides otherwise constrained firms an opportunity to downsize, creating a non-financial link between bankruptcy policy and investment behavior. This paper is the first to empirically analyze that link, estimating a dynamic oligopoly game that incorporates choices over investment and reorganization. Using data on the U.S. airline industry, I find evidence that a 2005 reform, which reduced debtors’ bargaining power in Chapter 11, contributed to the “capacity discipline” widely observed in the industry since 2006. Simulations imposing a liquidation-only insolvency policy suggest that reorganization increases capacity by up to 20%.

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

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

Download PDF (This draft: 09/2022)

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.

Income and Product Quality Dispersion in the U.S. Airline Industry

Joe Mazur, Mouli Modak, & Brian Roberson

2022 draft uploaded soon.

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, & Mouli Modak

Retired Projects

Price Distribution Effects of Airline Mergers

Joe Mazur, James Roberts, & fSweeting

When evaluating a proposed merger, a primary concern for antitrust authorities is the potential for anti-competitive price outcomes, typically manifested in higher overall prices for consumers.  In markets for differentiated products, however, the overall level of prices may not be the only concern.  Quantity levels, product variety, and the degree of price discrimination could all change significantly as the result of a merger.  Using data on the airline industry, we examine the impact of mergers on price dispersion, finding that prices rise more at the top of the fare distribution than at the bottom when the merger is between two legacy carriers, while the opposite effect is observed for the recent merger between Southwest and AirTran.  We propose and test possible explanations for this pattern.

Sensitivity Analysis in Merger Simulation

Simulation based on economic models has become an increasingly important tool for antitrust authorities in predicting the price effects of a proposed merger. However, assessing the accuracy of this method has received relatively little attention. Although several studies have compared simulated to actual outcomes, few have examined the sensitivity of their predictions to underlying assumptions. In this paper, I offer a straightforward approach to analyzing the sensitivity of merger predictions to assumptions about the change in marginal costs for overlapping products. I then demonstrate my approach using price and quantity data for a merger between two large airlines, Delta and Northwest. I find that the simulated price impact of the merger is relatively robust, largely because the range of implied marginal costs for overlapping routes is not particularly wide. The simulations tend to overestimate the price impact of the merger overall, predicting average price changes in the range of 5.1% to 6.1%, versus an actual change of 4.9%.

R&D vs. Physical Capital Investment under Collateral Constraints

Joe Mazur & Daniel Xu

Tangible capital (buildings, equipment, etc.) serves more readily as a source of collateral than intangible capital (R&D output, brand equity, etc.).  When credit markets are tight, a firm’s need to borrow funds may therefore influence its R&D investment decision.  We examine the trade-off between tangible and intangible capital investment in the face of economy-level liquidity shocks using data on the electric motor industry in the Republic of Korea.

This page last edited 2022-10-13.