Many airline routes worldwide are served by only one airline (a monopoly). Within the U.S., these are often from a small or mid-sized city to a major carrier hub and frequently operated by a regional carrier under contract to the larger airline.
-Will these monopolies typically earn economic profits?
-Why do not other airlines enter these monopoly routes?
-Is price discrimination likely? If so, what type (1st, 2nd, or 3rd degree)? Will price discrimination increase profts?
-monopolies, by definition, earn economic profits. As long as the firm has some sort of market influence, it will earn economic profit.
-Other airlines do not enter the industry because there are barriers to entry, such barriers may include:
- high cost of entering (such as buying ...
Will these monopolies typically earn economic profits?