To find:
The type of rivalry that exists.
Explanation of Solution
It is an example of producer-producer rivalry. In an airline industry, there are various operators who attract customers by price and non-price competitions. Customers usually travel in those airlines which either give big discounts or are cheaper than others.
For example, when an airline gives an offer to its customer to carry two bags without extra charge, it is considered as a non-price competition strategy. Customers get attracted towards such an airline and save on their flying cost. Since this offer is aimed at wooing the customers away from the competitors, it is an example of producer-producer rivalry.
Producer rivalry:
Producer rivalry is a completion faced by suppliers when there are many producers competing for limited number of customers.
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Chapter 1 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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