A day after Continental Airlines announced its new low fares for the autumn on travel from New York (i.e., Newark and LaGuardia Airports) to selected cities in the U.S., Canada, the Caribbean and Latin America, USAir and American Airlines matched Continental's fares. USAir and American Airlines are using a _____ strategy.
A) Value pricing
B) Price signaling
C) Demand-based pricing
D) Going-rate pricing
E) Price trimming

Question

Quizplus · Accepted Answer

USAir and American Airlines are using a price signaling strategy by matching Continental Airlines' low fares for autumn travel from New York to selected cities. Price signaling is a strategy in which one firm changes its prices and other firms in the industry follow suit, often leading to a price war.

A Day After Continental Airlines Announced Its New Low Fares