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Business, 20.03.2020 04:19 nayelimoormann

According to the Washington Post article Oil Prices Have Nosedived. Why Aren't Airfares Doing the Same?, one reason that airlines have not decreased prices as oil prices have fallen is due to the nature of competition in the industry. Specifically, the article mentions a type of collusion called tacit collusion. Which of the strategies below is an example of tacit collusion? JetPurple Airlines decides to compete on quality instead of price. JetPurple offers the highest value to consumers by providing, at no additional cost, extra leg room, in-flight Wi-Fi, movies, and meals. Gamma Airlines chooses to keep its ticket prices high on its New York to Los Angeles route instead of undercutting its competition, Divided Airlines. It fears doing so would cause Divided to undercut Gamma on its Seattle to Miami route. Fearing the same, Gamma also decides to charge high prices. ScottAir decides to let passengers only pay for exactly what they want. The basic ticket provides only a seat. Checking luggage, snacks, selecting a seat, and other amenities are all purchased separately. Southeast Airlines chooses to set the price of its tickets equal to the marginal cost of providing flights in an attempt to drive all other competition out of the market.

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