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what seem to be some of the measures necessary to increase contest ability in airline markets?

what seem to be some of the measures necessary to increase contest ability in airline markets?

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Answer #1

Contestability occurs when there is no entry or exit cost or it is very negligible. thus, price prevailing in such market is very close to one that prevails in competitive market. Following steps can be taken to increase contestability in airline markets:

  • Reducing legislation that prevent entry of new firms in market.
  • Allowing firms to use common network easily and amicably.
  • Predatory pricing should be controlled through government agencies.
  • Facility of leasing and easy availability of finance make market more contestable.
  • Abuse of monopoly power should be monitored appropriately.
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