Suppose a small regional airport is served by one of the major airlines, and a new low-cost airline enters the market. If the major airlines cuts its air fares in this market to levels that are below its marginal cost in response to the other firm's entry, then the major airline may be engaging in

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The major airline may be engaging in predatory pricing if it sets prices below its marginal cost with the intention of driving the new low-cost airline out of the market. This practice is anti-competitive and can result in a monopolistic market structure for the dominant firm.

Suppose a Small Regional Airport Is Served by One of the Major