Similarly, estimates of the elimination or addition of one competitor have been made. The average traveler has few, if any choices, and they would become fewer if this merger and the ones in its wake are approved. Generally, we find that most routes have fewer than four carriers. Given such a high level of concentration, we should not be surprised to find that anti-competitive behavior and changes in market structure have a significant impact on fares. Exercising market power is easy in such highly concentrated markets.
Market power is evidence both by higher prices wherever it exists and miserable service.
Since they do not face effective competition, they do not feel compelled to improve quality. Flowing from this basic observation, we find support for a number of traditional observations about public policy. Actual competition is vastly more important than the threat of competition. Barriers to entry play a critical role in determining the level and nature of competition. Mergers tend to reduce competition, increase prices and lower output.