Competition versus Predation in Aviation Markets

Chapter 2Predatory Pricing: Still a Rare Occurrence?

Ashish Lall

Ronald [Coase] said he had gotten tired of antitrust because when the prices went up the judges said it was monopoly, when the prices went down they said it was predatory pricing, and when they stayed the same they said it was tacit collusion. – William Landes

1. Introduction

There seems little agreement among economists about the structure of the aviation industry in the United States. Some claim that the big five carriers have increased their shares of passenger traffic over the last decade and this has come at the cost of independent low cost carriers. Concentration is even higher at the local and regional level and the large airports of the Nation are dominated by monopolies ...