ECO 405 Miami University Airlines in the Industry have

Price Wars Paper

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ECO 405 Miami University Airlines in the Industry have Price Wars Paper

Suppose airlines in the industry constantly have price wars. State in general what a firm hopes to
gain (regarding market share) from starting a price war. For each item (a through e), where there
are two possible conditions listed, state what condition would more likely be occurring that
would lead to a price war, and state why that condition would likely lead to a price war: (a) is
industry demand increasing or stagnant, (b) do firms in the industry have identical costs or
different costs, (c) are firms operating at full capacity or excess capacity, (d) do buyers have low
switching costs and firms selling an identical product, or high switching cost and firms selling
different products, (e) is a large percentage of firm sales evenly spread throughout the year (for
example the same number of sales each month of the year) or is a large percentage of firm sales
occurring in a short period of time (for example having most sales occurring in a few months).

May be related to 5-forces components, competitive advantage