Question
It is alleged that Southwest Airlines, American Airlines, Delta Air Lines, and United Airlines have been colluding to limit the increases in their capacity with
It is alleged that Southwest Airlines, American Airlines, Delta Air Lines, and United Airlines have been colluding to limit the increases in their capacity with the intent of increasing airfares. The airlines say the allegations are without merit and that the airline industry is highly competitive with more people flying than ever before. Explain how limiting the increase in capacity could lead to higher airfares. Explain how limiting the increase in capacity could lead to greater profit for the airlines, smaller consumer surplus, and deadweight loss
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