Running head: AIRLINE ECONOMICS 1 Airline Economics Ernest N. Vaughn Embry-Riddle Worldwide
AIRLINE ECONOMICS 2 Airline Economics An oligopoly is a market that is controlled by a select few large firms. Oligopolies typically consist of four key traits. These are substantial economics of scale, growth through merger, mutual dependence, and price rigidity and nonprice competition. Some characteristics are unique to the airline industry as well. Economics of Scale Economics of scale refers to a ratio of cost to growth of the company’s size. As the company grows, it may require a higher production output. The companies involved must run their businesses at the most efficient manner possible. This is done to maintain the price of service or goods being sold. A limited amount of businesses would be able to continue business if this were the case. Growth Through Merger Growth through merger happens when competing companies end up joining forces in order to hold a larger market segment. This may happen through by outs or simply combining efforts.
You've reached the end of your free preview.
Want to read all 4 pages?