Nature Of Competition Collusion And Pricing Airline Industry Economics Essay

Nature Of Competition Collusion And Pricing Airline Industry Economics Essay The enactment of the Airline Deregulation Act of 1978 eliminated price and entry regulation of the domestic airline industry. Since then the U.S. airline industry has grown tremendously. The US domestic market competes in an oligopoly landscapes. Hence there is certain level of barriers to competition. For example, control over the computerised reservation systems used by travel agents provided the majors with a powerful weapon for disadvantaging smaller competitors. American Airlines Sabre system and Uniteds Apollo system together accounted for three-quarters of all national computer reservation systems by the late 1980s. Control of this important avenue for travel agents to make reservations enabled the majors to discriminate against smaller firms in a variety of ways-from instituting screen bias favouring the on-screen presentation of the controlling firms flights, to charging exorbitant fees to other carriers for displaying their flights on these computer systems (transferring up wards of a half-billion dollars annually from the smallest to the largest carriers).[2] More recently, the Big Five carriers have joined together to collectively market their tickets online through their Orbitz Web site-an alliance that may enable them to better coordinate their non-competitive oligopoly pricing and to circumvent rules put into place to prevent them from anticompetitive using their computer reservation systems while, at the same time, disadvantaging competing distributors of air tickets.[3] Predatory Pricing Furthermore, dominant carriers were suppressing competition through predatory pricing. For example, when Spirit Airlines attempted to penetrate Northwests Detroit hub with a one-way Detroit-Philadelphia fare of $49, Northwest Airline responded by slashing its average fare on the route by 71% (from $170 to $49) and scheduling 30% more seats. Once Spirit abandoned the route, Northwest raised its fare to $230 and cut its seat capacity.[36] Similarly, when Frontier Airlines initiated service from Denver (United-dominated hub) to Billings, Montana, it offered an average $100 fare, half the prevailing fare charged by United. United slashed its fare to match Frontier; when Frontier exited the route, United raised its fare above its original level.[37] Collusion Collusion is a difficult game to play when the number of conspiring rivals is large. It is hard to keep a hundred firms in line when their cost structures differ, when their production facilities vary, and when some have an incentive to cheat on a price agreement or to violate output restrictions. Numbers make a difference. When numbers are large, conspiracies are difficult to organize, difficult to conceal, and difficult to enforce. However, public policy faces a serious challenge in oligopolistic industries like the case of the Airline industry where major carriers eschew outright collusion and rely instead on a course of conduct characterised as tacit collusion, or recognition of mutual interdependence to resemble the effects of outright conspiracy. The mechanics of tacit collusion is apparent particularly in an oligopoly market dominated by a few major players. Each carrier naturally recognises the mutual interdependence between it and its rivals. Carrier X knows that it if were to cut price in order to increase its market share, its aggression would immediately be detected by carriers Y and Z, which would respond with retaliatory price cuts of their own. Market shares would be unaffected, but all carriers would now operate at lower prices and profits. Henceforth, Carrier X cannot expect to increase its market share or revenue at the expense of its rivals. It cannot afford to calculate in terms of maximising its own profits in isolation but instead must constantly ask whether a particular decision on price or output will be not only in its own self-interest, but also in the best interests of its rivals. By recognising mutual oligopolistic interdependence, it must be concerned with group profits and group welfare. In other word, under oligopoly landscape, independent, aggressive, genuinely competitive behaviour is perceived as counterproductive-an irrational strategy for the individual carrier. In an oligopoly, groupthink will influence a carriers strategy when it is contemplating price increases as it cannot act alone. In other word, groupthink replaces the calculus of individual advantage, and each carrier must behave as a responsible member of the oligopoly group rather than as a reckless, self-seeking competitor. In oligopolies, this recognition of mutual interdependence may extend to non-price competition. For example, if carrier A refrains from aggressive price competition but seeks to increase its market share through aggressive innovation program, it cannot expect its rivals to sit idly by. It must expect them to increase their research efforts as a simple matter of self-defence, thereby nullifying its expected gains. Anticipating such retaliation which could erode oligopoly profits- carrier A might refrain from innovation for the same reasons it would avoid price-cutting. Rationality again commands responsible nonaggressive behaviours; the most effective profit-maximisation rule under oligopoly is to get ahead by getting along. Nevertheless, the level of oligopolistic interdependence and collusion varies from situation to situation. It depends on such factors as whether the oligopoly is tightly knit (small number of firms) or loosely knit (a larger number);whether it is homogeneous or heterogeneous; whether it is symmetrical (having firms of roughly equal size) or asymmetrical (with one firm disproportionately larger); whether or not the industry is mature (having had time to develop its internal arrangements and institutions to promote cooperation); whether the industry is populated by reasonable managers or by a few mavericks. In the US domestic market, the advent of the Internet has increased the efficient of signaling or collusion. Carriers can see what the competition is doing immediately by going to the Internet that allow them to react quickly by adjusting their own prices. This is a far cry from the days when price books were set in type and could not be changed for months. Now most prices can be adjusted several times a day, if needed. Apparently, this is a game that the airlines are particularly adept at. As consumers have more transparent access to real-time flight pricing through online services like Orbitz, so the airlines are almost obligated to adjust to each other. This is particularly apparent on routes where there is no rogue player, like Southwest Airlines or JetBlue as they are (within limits) free to adjust prices upward. As long as the members of the oligopoly with real selling power tacitly agree that a major price war is not in their interest, chances are that prices can quickly readj ust themselves, keeping in mind the balance of costs and optimal prices for maintaining profitable sales levels. Nevertheless, the combined market share of the Big Five network airlines (Delta, United, American, US Airways, and Northwest ) that peaked in 1992 has been declining since deregulation [ *]. Furthermore, with the influx of several low-cost carriers, tacit collusion is becoming difficult to organize, conceal and enforce even though oligopolistic rationality and its collusive consequences are inevitable concomitants of oligopoly industry structure. Pricing Pricing is important for the carriers. If prices are too low or too high, it can drag down profits. Thus, it is important for the carriers to derive profitable airfares and discourages unprofitable one. To maximise profits, the carriers should set prices so that marginal revenue just equals marginal cost. In other words, it should use profit-maximising prices as the starting point. The economic model of pricing ****show diagram****, which is called marginal cost pricing, clearly identifies a pricing strategy that will maximise profits. This pricing strategy also identifies the information needed to set prices, thus simplifying the process. In other words, the profit-maximising price is where the incremental margin percentage equals the reciprocal of the absolute value of the price elasticity demand  [1]  [ **] Based on pricing rule, the carriers should adjust its price where there are changes in the price elasticity of demand or marginal cost since the carriers compete under oligopoly landscapes with homogeneous services. Airfares have dropped significantly over the years [***] since deregulation which helped to simulate competition resulting in the entrance of several low-cost carriers. This could partially due to regulator and oligopolies increase efficiencies, putting direct or indirect price pressure on their suppliers as well as putting pressure on the wages and benefits of their employees Hence there is growing belief is that oligopolies can be price-neutral as opposed to manipulating prices. The strategic variable for airline carrier is price in the short run. Generally without product and service differentiation, the basic service offered by the carriers would be homogeneous. Under the Bertrand model, the carriers which produce at constant marginal cost and compete aggressively on price in order to gain a bigger share of the market. Under such condition, the market equilibrium is perfectly competitive pricing. However, in a loosely knit oligopoly structure, the individual carrier has incentive to offer heterogeneous services. Through heterogeneous services, it can charge personalised pricing or group pricing based on passenger willing-to-pay to achieve higher profits. For example, if carrier X sells its airfares at a single, it loses in two ways. Firstly, some passenger would be willing to pay more than $100 for a ticket during the last hour of the flight. Secondly the carrier does not sell to passengers who are willing to pay more than $50 but less than $60. This is illustrated in the graphic below, where P=price and Q=quantity. By charging such passengers at different price, the carrier could profitably sell to a much larger passenger base. Furthermore, with differentiated services, should one carrier cut its price below other carriers price; it would take away only part of the other carriers entire demand. Thus, carriers should have strong incentive to differentiate its offering in order to raise their equilibrium prices. However, there is a risk of loosing the market if the services are not on par with its pricing and demand. The carriers must balance their desire for market share at the same time avoid head-to-head price competition since the less differentiation in their services, the more direct will be in price competition among them and the lower would be incremental margins.

Changes in Education Sector in Rural Bangladesh

Education Sector Education sector has faced significant changes over decades in rural Bangladesh. Earlier the maximum level of education that people received was mainly upto primary education. The drop-out rate was very high. The number of female students was very low and they used get married while studying in primary level. As a result, the number of female students in the secondary level was almost zero. The main reason behind this low enrollment in secondary level was ignorance of the parents.They had this mind setup that primary education was good enough for their children and encouraged them to get involved in income earning activity for which they got no time to study. But, people are learning about the importance of education gradually, although the number of drop-outs is still not very low in poor families and among girls. Another trend in the village was late admission. By the time they completed primary education they had become 17/18 years old.Nowadays, in the village a s tudent completes his/her higher secondary education at this age. The medium of education has also changed. Earlier parents were inclined to ‘madrasa’ education. They wanted to make their children ‘moulana’. But today the parents see their children becoming doctors or engineers in the future. Earlier the villagers used to send their children to colleges near the village or at best near the district. But in recent years, parents are showing interest in sending their children to the capital for studying in college.Many of them are getting admitted in BUET, Dhaka University, and other prestigious universities of the country. One of the main reasons of this radical change in education level of the village is the establishment of school, colleges in the recent years. Earlier, there was only one or two primary and high schools in the village. But many schools, colleges are being established nowadays with the initiative of the government and NGOs.The government is offering different scholarship programs for encouraging the rural people to send their children to schools, colleges and receive education. Awareness programs are being held by NGOs and the government for making people conscious about the importance of education. Another important change in the education system in rural Bangladesh is increased enrollments in diploma level of education. This trend has started very recently. Some of the students has already passed diploma others and are on the way of passing.

Interview of Music Teacher on the Importance of Music Programs

I had the distinct privilege and pleasure of interviewing Ms. ABC, Elementary School Music Teacher at ABC School. This interview is a true testament to the challenges educator’s face in today’s music classrooms. Music teachers are faced with diverse classrooms filled with children who have different learning styles and varying ability levels; therefore, certain issues will arise relative to the diversity. I am extremely grateful to Ms. Liza Smith for supporting me with this interview.Why is music important? When educational cuts are made, music and art are amongst the first subjects to go. Unfortunately, it means that parents, educators and even board members are overlooking each subject`s importance. Music education is more than just introducing students to beats, notes and songs. Instead, it completely transforms a child`s mind and opens up endless possibilities to their learning potential. Why is music education important? Music is a magical gift we must nourish and cultivate in our children, especially now as scientific evidence proves that an education in the arts makes better math and science students, enhances spatial intelligence in newborns, and let's not forget that the arts are a compelling solution to teen violence, certainly not the cause of it! † Is music learning underrated? Music is something with affects the mind, body and spirit, but yet its importance is often underrated, especially when it comes to the educational benefits of which there are many.With the ability to influence behavior, social skills, sensitivity and general achievement, music can have positive effects on many aspects of life. In children, music education is important as it promotes a desire to persevere and succeed, as well as having a whole range of other benefits. There is some evidence to suggest that through involvement with music, children have the opportunity to fine-tune their listening skills and consequently their comprehension. Both skills can b e applied to other academic subjects and can help students with problem-solving and concentration.Music uses both sides of the brain, so any participation will enhance learning and challenge the mind. Should Music and the Arts be used to teach other academic subjects? While studies show positive influences in other academic areas, music and the Fine Arts are an academic discipline that are, as the other academics, an independent way of learning and knowing. Reading, writing, and mathematics are important and all students should be successful in those areas, however none of those academic areas justify their existence on the basis of what is accomplished for another area. Each academic discipline is important for a well-rounded curriculum.Music and Fine Arts are an academic area of study equal to reading, writing, mathematics and science. Should the study of Music and the Fine Arts be available to all students? Where music and Fine Arts programs have been eliminated because of fundin g difficulties, students have been deprived of a significant opportunity of learning and knowing about the world around them. All students should be able to â€Å"elect† to study music and the Fine Arts in depth at the secondary level. All students should have the opportunity to study music at the elementary level in a systematic, meaningful way.If music and the Fine Arts are reserved for only wealthy schools or communities, a cultural â€Å"elite† will be created, which also creates a significant distinction of social class. Music and the Fine Arts should not only be available to those children of wealthy parents who can purchase private tutors or subsidize public schools with donations to sustain public school programs, but also to students of average or low socio-economic areas. How should Music and the Fine Arts fit into the educational curriculum? The school curriculum should be designed to deliver more than a minimal education to students.Music and Art should be taught at every elementary school in a regular and systematic way. Music and all Fine Arts should be considered â€Å"academic electives† in secondary schools and available to all students on a multi-year basis to allow adequate time for skills to develop sufficiently for informed decisions about college programs and career choices. All academic electives, including Music and Fine Arts, should count towards entrance requirements in colleges and universities. All students graduating from public schools should have received at least one credit in Fine Arts.All colleges and universities should require one Fine Arts credit for admission. In closing it is my belief that we as music educators, must take the lead in sharing this information with the people that can make the difference in the future; school boards, administrators, parents, and legislative representatives. We must advocate for the arts. It is vital that we become proactive in our support of the arts. By reviewing the studies involving music we have found that participation in school music has a positive impact on areas considered outside the realm of music.As more people become aware of the research in this area, we should see increased enrollments in arts classes. The use if the arts throughout the curriculum, as a tool for better learning is an area that will expand. With dropout rates being so high, educators need to combine resources and to use the tools available for a more effective method of education. I feel that the arts will play a major roll in the future success of the education system. Don't stand on the sidelines and watch the profession dwindle away. Get involved and help it grow.

Essay about Of Ideas, the Mind, and the Universe - 1304 Words

Perception is a concept that we take for granted in our everyday lives. We assume that what we perceive are the physical properties of the objects we encounter. George Berkeley, through his work Three Dialogues Between Hylas and Philonous , questions these notions of what is truly real. Berkeley voices his opinion through the character Philonous, who assumes a very similar role to Socrates in the Platonic dialogues. First, it is necessary to distinguish between different types of sensory perception for clarity’s sake. Philonous systematically shows where all sensory perceptions break down to qualia within the mind in the beginning of his dialogue, first with secondary qualities, and then primary qualities. To explain our sense of objective†¦show more content†¦Hylas believes that heat is inherent within the object (and is thus an example of one of Locke’s primary qualities), but Philonous presents him with a simple thought experiment which dispels Hylas’ belief: â€Å"Supose now one of your hands hot, and the other cold, and that they are both at once put into the same vessel of water, in an intermediate state; will not the water seem cold to one hand and warm to the other?† Here, Philonous has given an example of two opposite sensations arising from the same object, which, if we assume heat to be a property inherent of the object, creates a contradiction. Therefore, Philonous concludes that heat cannot be a sensible quality. Philonous gives another example, in which he says that if one pricks their finger with a pin, the pain obviously occurs from the prick, not a property inherent in the pin. He presents this as analogous to the fire, and claims that it is just as absurd to say that the pain from a burn, which he equates with a great heat, is inherent within the fire as it is to say that pain is inherent within the pin . Philonous uses this technique of pleasure and pain existing within senseless objects in order to debu nk a number of other sensory perceptions, including sweetness, bitterness, and odour . As for sound, Hylas admits that the sensation of sound occurs within the mind, but that it is based upon the movement of air. Philonous refutesShow MoreRelated Transcendentalism: The Philosophy Of The Mind Essay example1046 Words   |  5 Pages Transcendentalism: The Philosophy of the Mind nbsp;nbsp;nbsp;nbsp;nbsp;Transcendentalism is the view that the basic truth of the universe lies beyond the knowledge obtained from the senses, a knowledge that transcendentalists regard as the mere appearance of things (Adventures 162). Transcendentalists believe the mind is where ideas are formed. The transcendentalist ideas of God, man, and the universe were not all original, but were a combination of other philosophies and religions. nbsp;nbsp;nbsp;nbsp;nbsp;OneRead MoreHawking s A Briefer History1377 Words   |  6 PagesSteven Hawking’s A Briefer History in Time tells a simplified story of the universe. Hawking’s starts out the book by going over the different type of cosmology that was held throughout history. He mentions the beliefs that Aristotle, Copernicus, Galileo and other notable individuals held about the universe. This discussion is used to segue into a brief description of the different theories, laws, and ideas concerning the universe held by people today. Newton’s laws of motion and gravity and Einstein’sRead MoreChanges Brought about the Scientific Revolution730 Words   |  3 Pagesamend the Ptolemaic universe and give rise to his heliocentric revolution. 3. Newton was a devout Christian, but he did not let God limit his findings about the universe. Basically, Newton related the universe to a clock; the universe was a clock that was created by god and set into motion. Newton based his view of the world on the idea of inertia: an object at rest stays at rest and an object in motion stays in motion unless acted upon by another force. Based on Newton’s idea, an object does notRead MoreEssay The Teleological Argument1368 Words   |  6 PagesWilliam Paley and David Hume’s argument over God’s existence is known as the teleological argument, or the argument from design. Arguments from design are arguments concerning God or some type of creator’s existence based on the ideas of order or purpose in universe. Hume takes on the approach of arguing against the argument of design, while Paley argues for it. Although Hume and Paley both provide very strong arguments, a conclusion will be drawn at the end to distinguish which philosophiser holdsRead MoreDavid Humes Dialogues Concerning Natural Religion Essay1524 Words   |  7 PagesDavid Hume’s Dialogues Concerning Natural Religion provide conflicting arguments about the nature of the universe, what humans can know about it, and how their knowledge can affect their religious beliefs. The most compelling situation relates to philosophical skepticism and religion; the empiricist character, Cleanthes, strongly defends his position that skepticism is beneficial to religious belief. Under fire from an agnostic skeptic and a rationalist, the empiricist view on skepticism and religionRead MoreTruth as the Goal of Philosophy Essay1255 Words   |  6 Pagesand effect argument is called a causal argument. Descartes is interested in logic, one truth progressing to the next. Descartes gives a causal argument for the existence of God in Meditation III. He deals with the effect of the idea of absolute perfection in our minds and rationalizes that the cause is God, therefore proving the existence of God. Descartes believes there are two types of reality: objective and formal.. The degree of reality depends on the degree of independence. The more independentRead MoreEssay Mahayana Buddhism1396 Words   |  6 Pagesway a unified movement. Mahayana Buddhism still adheres to the basic fundamental beliefs presented in the Pali Canons, however, it Sutras often expand upon these basic ideas and traditions in order to answer the questions of a later generation. After closer study of the Mahayana texts the â€Å"A Sutra for Long Life† and â€Å"The World Universe as a Sutra†, it seems evident that, although Mahayana Buddhism is based on the teachings of the traditional Pali Canon, it places a larger emphasis on philosophical inquires;Read MoreGreek Philosopher Xenophanes1392 Words   |  6 Pagesforward his ideas of God through his poetic approach. He noticed the corrupt behavior of humans and realized that if human are going to worship any being it must be worthy of such an h onor. He argued that ancient Greek Gods of Olympia had experienced downfall similar to humans and thus are not worthy of being worshipped. Xenophanes declared the idea of unity of God. This notion was very unusual for Greek culture and society. He suggested that different poets and writers have induced the idea of multipleRead MoreDefine Creatio Ex Nihilo1625 Words   |  7 Pagesout of nothing.† It contrasts with the phrase â€Å"creatio ex materia† (creation out of some pre-existent, eternal matter) and with â€Å"creatio ex deo† (creation out of God.) Christians all believe that the world is created ex deo, however, whether the universe was created â€Å"ex nihilo† or from already present material is still a topic of discussion today among Christians and people of other beliefs alike. There is evidence in the bible supporting both creatio ex nihilo and ex materia. Despite the simplicityRead MoreQuestions On Religion Of Science925 Words   |  4 Pagesone holds about the world, life, and reality.† 3. Religion: â€Å"†¦ any man’s belief about his relationship to the invisible universe.† â€Å"We might speak of a pure religious science as we would speak of a pure natural science, which means the study of natural causes. We might speak of pure religious science as that branch of science which studies the natural principles; the nature of Mind and Consciousness. Then we could think of applied religious science as the application of this principle in human needs