In the past, the Department of Transportation allowed airline mergers that gave the merged airlines market shares of 79 and 82 percent, respectively, in their hub cities.The concept the DOT used to allow mergers where there was obvious concentration was most likely
A)the good trust principle.
B)contestability.
C)the efficient market principle.
D)the monopolistic competition principle.

Question

Quizplus · Accepted Answer

The concept of contestability refers to the idea that a market can be competitive if there are no barriers to entry or exit, even if there is a high concentration of market share. The DOT likely used this principle to justify allowing mergers with high market shares, assuming that potential competition could still discipline the market.

In the Past, the Department of Transportation Allowed Airline Mergers