1.The New York Times reports that the largest four domestic airlines now account for over 80% of all domestic air travel (up from only 30% ten years ago).The New York Times article indicates that these four airlines have effectively become a cartel since prices are rising, flights are full, and profits are large.

a.If there is no further consolidation in the airline industry, comment on the likelihood that the four airlines will be able to maintain a cartel. (5)

b.If you were the CEO of one of these airlines, what steps could you take to increase the likelihood of long run elevated profits? (5)