BSAB 415 – Airline Management Assignment 3.2 – Airline Economics by Chan Hsing Joo Cheryl ID: 2101610 Embry-Riddle Aeronautical University Worldwide Aug 2015 1
BSAB 415 – Airline Management 1.Describe the general characteristics of oligopolies. 1. Substantial economies of scale. Firms in oligopolistic industries typically require large-scale production to obtain low unit costs. Large-scale production is supported by intensive labor and management specialization of job responsibilities, utilization of the most efficient technology available, and effective use of by-products. 2. Growth through merger . Many of the oligopolies that exist today have resulted from mergers of competing firms. The purpose of most mergers is to gain a substantial increase in market share, greater economies of scale, more buying power in the purchase of resources, and various other advantages that smaller firms do not possess to the same extent. 3. Mutual dependence . When there are only a few firms in a market, it matters very much to each firm what its rivals do. The small number of sellers in an oligopolistic industry makes it necessary for each seller to consider the reactions of competitors setting prices. They try to out win rivals by formulating strategies that anticipate the possible counter-reactions of their opponents.
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- Summer '19
- Economics, Economics of production, Airline Management