Cost economies and consolidation
Article: Cost economies and consolidation in the U. ... The purpose of this paper is to measure and evaluate cost economies as a driver for concentration. Consolidation in the U. ... airline industry following deregulation has been partly to achieve cost economies. ... There remained empirical questions about the concentration and the role of the cost structure in explaining changes since deregulation. Economies of scale are defined as decreasing long run average costs as output increases, allowing choice among existing technologies. Airlines experience some cost indivisibilities in ground operation like gates and providing route information through computer reservation systems. Despite these possible sources for economies, empirical survey concluded no economies of scale in the U. ... The sources for economies of scope are joint and common costs which are created by production processes that share resources so that the source left by one process can be used by another process.