If Delta Airlines were to significantly change its fare structure and flight schedule to enhance its competitive position in response to aggressive price cutting by Southwest Airlines, this would be an example of
A) explicit collusion.
B) tacit collusion.
C) competitive dynamics.
D) a harvest strategy.

Question

Quizplus · Accepted Answer

This would be an example of competitive dynamics, which refers to the actions taken by rival firms to gain an advantage over one another in a competitive market. Delta's response to Southwest's aggressive price cutting would be an example of how firms react to changing market conditions to maintain or improve their competitive position. Explicit collusion and tacit collusion both involve firms conspiring to limit competition, which is not the case here. A harvest strategy involves a firm reducing its investments in a product or market that is no longer profitable, which is not the situation described in this scenario.

If Delta Airlines Were to Significantly Change Its Fare Structure