A low-cost airline described as one of the excellent companies in the bestseller of the early 1980s, In Search of Excellence, is no longer in business. Industry analysts state that although the service and prices provided by the airline were what customers wanted, the larger airlines were able to drive the low-cost airline out of business through an aggressive price war. This scenario is illustrative of which aspect of the competitive environment

Question

Melissa Park

Business

16 April, 03:28

A low-cost airline described as one of the excellent companies in the bestseller of the early 1980s, In Search of Excellence, is no longer in business. Industry analysts state that although the service and prices provided by the airline were what customers wanted, the larger airlines were able to drive the low-cost airline out of business through an aggressive price war. This scenario is illustrative of which aspect of the competitive environment

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Answers (1)

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London Spears · Answer 1

Answer: Monopolistic competition

Explanation:

This is a market in which large numbers of producer sells differentiated products in terms of quality or branding. The ability to differentiate the products makes it possible for the different firms to practice price discrimenation which is further strengthen through advertising of the product, the price differences may force a firm out of the market if the demand for it's products falls significantly.