When an Airline Reduces Its Fares, Other Airlines Typically Match

question 172

Essay

When an airline reduces its fares, other airlines typically match the action.But when an airline increases its fare, other airlines do not follow suit.Which oligopoly model cartel, price leadership, or kinked demand best fits the airline industry as described? Justify your choice and explain why the other models are less appropriate.

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Definitions:

Communication Model

A theoretical framework that describes the process of transmitting information from a sender to a receiver.

Mental Map

An individual's personal, internal representation of the spatial relationships between objects in their environment.

Selective Perception

The process by which individuals perceive what they want to in media messages while ignoring opposing viewpoints.

Receiver Distorts

Occurs when the person receiving a message misunderstands or alters the information, leading to communication errors.