ECON 5315

Besanko, Chapter 8 Homework, ADAPTED End-of-Chapter Questions (11.5 points possible)

1.It has been said that Porter's five forces analysis turns antitrust law on its head. What do you think this means in terms of US commercial airlines? [Hint: Think of your project.] (1 point)

1.Supposing Delta is an example of a very large US commercial airline, how does the magnitude of scale economies affect the intensity of each of the five forces? (2.5 points)

3.(2 points; 1 point each):

a.How does capacity utilization affect the intensity of internal rivalry in the commercial airline industry?

b.How does capacity utilization affect the extent of entry barriers in this industry?

4.(2 points; 1 point each)

a.In the US, how does the magnitude of consumer switching costs affect the intensity of internal rivalry in the US commercial airline industry?

b.How does the magnitude of consumer switching costs affect the intensity of entry into this industry?

5.(2 points; 1 point each)

a.How do exit barriers affect internal rivalry in theUS commercial airline industry? [Hint: Think of your project.]

b.How do exit barriers affect entry into this industry?

10.(2 points; 1 point each):

a.Coopetition often requires firms to communicate openly. How is this different from collusion?

b.How can antitrust enforcers distinguish between coopetition and collusion in the US commercial airline industry?