question archive Some Australian airline operators claim that some Australian airports abuse their monopoly power by charging excessive fees and charges for the services they provide
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Some Australian airline operators claim that some Australian airports abuse their monopoly power by charging excessive fees and charges for the services they provide. Use the monopoly model to explain why and how this "blatant profiteering" may occur.
The 'blatant profiteering' occurs in the monopoly model because, in a monopoly market, the firm owns the complete market share. The firm plays a dominant role in the market and allows it to raise the prices of goods and services it offers to consumers. In other words, it is the lack of competition in the monopoly market, which allows the firm to raise the prices.
In a case given in the question, the Australian airports have a monopoly, which allows them to charge excessive fees from airline operators.