specialization of certain jobs, and efficient utilization of technology, low costs can come. This would mean that a market can only support a few firms of the perfect size to keep them thriving. New smaller firms would find it difficult to survive in this type of economic environment which can only support a few. In other markets, the emergence of oligopolies came after mergers of a few of the major firms. This has been seen in the past in the banking and financial market. The reason behind merging is so that both companies can then share a larger portion of the market share and controlmore. This allows that company to then operate at a better capacity. In the airline industry, many airlines have merged into others in order to remain competitive and continue to operate. In a oligopolistic market, the companies, firms or airlines that are competing with each other have to feed of each other’s reactions to market moves. In order to be competitive, airlines
3.2 - ASSIGNMENT3have to monitor the moves made by their competitors and figure out ways to outplay them and create an advantage for themselves instead. Another characteristic known to be in oligopolistic industries is the fact that the prices between all the firms seems to be almost equal. This means that the airlines have to be creative and unique in other areas such as advertising and customer service to retain and gain customers. I can see why the airline industry is an oligopolistic economic environment. Many of the airlines operate exactly as any other firm in an oligopolistic economy in different industries.
3.2 - ASSIGNMENT4References:Wensveen, J. G., & Wells, A. T. (2011, pg. 35 – 36). Air transportation: A management perspective (7th ed.). Farnham, England: Ashgate.
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- Fall '16
- Kelly Lawton
- Economics, Airline Economics