G2 EE UK air transport industry

  • Created by: kgarrod
  • Created on: 21-02-23 22:46
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  • Plan
    • market structure
      • dominated by a few companies (oligopoly)
        • high barriers to entry (expensive)
        • Virgin, TUI, Easyjet & British airways
      • collusion: discuss/ work together to negotiate price and quantity
      • relatively price inelastic
      • kink demand curve: not a straight line but has a different elasticity for higher and lower prices
      • imperfect competition
      • Virgin, TUI, Easyjet & British airways
    • Economic implications
      • government intervention= more competition= greater efficiency & price war
        • unilateral deregulation= gains go abroad
      • BREXIT
        • short staffed, inefficiency & lower wages
        • EU had unregulated 'open skies' & abandoned various price restrictions
      • HSR substitute
    • Approach if you were the Gov
      • pollution permits: lead to emerging self-made monopolies
      • privatisation so to address (socio-economic) environmental issues e.g. climate change
      • Responsibility (CSR): 2007 British airway fire
      • limit monopoly power to protect environment, workers, consumers etc in a free market
    • For & Against Gov intervention
      • + gov can support industry in economic crisis e.g. helped after COVID-19 (£1.5 million)
      • - price wars
      • + job creation
      • -too many regulations
      • + run the economy to benefit wider society
      • + comprehensive deregulation =no price control or control of entry


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