question archive Under which market structure can one classify the airline industry?
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Under which market structure can one classify the airline industry?
The airline industry is under a market structure known as an oligopoly. It is a form of imperfect competition since few businesses are dominating the industry. Also, the Oligopoly market structure has the power in altering the cost of their commodities and services that they offer through establishing several levels of output. Since oligopoly businesses provide the same output and compete with their competitors, any action that a single firm takes makes the other competitors notice some changes. As a result, the competitor might respond by cutting down the prices. Hence, in an oligopoly, firms are interdependent. Each of them knows that its market capability is susceptible to erosion resulting from competitors.