  This thesis investigates the dynamics of multimarket contact and airline
mergers on collusive pricing of airlines. In align with Bernheim and Whinston
(1990) and Athey et.al.(2004), it detects collusive pricing via pairwise price
difference and price rigidity. The piece of work extends previous work by
incorporating additional controls such as distinction between non-stop and
stopover itineraries and detailed market concentration measures. The findings
confirm a significant relationship between multimarket contact and reduced
price differences, indicating collusive equilibria facilitated by frequent
interactions across markets. Moreover, the results highlight that airlines
exhibit more collusive behavior when pricing non-stop flights, and are more
likely to attain tacit collusion when they approaches duopoly in a particular
market. The study also explores the effects of airline mergers on collusion,
employing an event study methodology with a difference-in-difference (DID)
design. It finds no direct evidence that mergers lead to increased collusion
among unmerged carriers. However, it reveals that during and after the merger
process, carrier pairs between merged and unmerged carriers are more likely to
collude compared to pairs of unmerged carriers.
