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    Will these monopolies typically earn economic profits?

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    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?

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    Solution Preview

    -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 ...

    Solution Summary

    Will these monopolies typically earn economic profits?