The agreement of all the commercial airlines not to lower their fares would be an example of a:
A) vertical restraint of trade.
B) horizontal restraint of trade.
C) tying arrangement.
D) monopoly.

Question

Quizplus · Accepted Answer

The agreement of all commercial airlines not to lower their fares would be an example of a horizontal restraint of trade because it involves cooperation or collusion between firms operating at the same level (in this case, competing airlines) to maintain high prices and reduce competition. This is prohibited under antitrust laws. Vertical restraints of trade involve agreements between firms at different levels of the supply chain (e.g. a manufacturer and distributor), while tying arrangements involve forcing customers to purchase one product in order to obtain another. A monopoly is a situation where a single firm controls the market for a particular product or service.

The Agreement of All the Commercial Airlines Not to Lower