Oligopoly: Strategic Pricing Structures

The major US airlines operate in a competitive oligopolistic environment dominated by five or so major carriers. Most have instituted programs where different classes of customers such as business and leisure travelers are charged different prices. In terms of raising revenue for the airline industry as a whole, these programs have _most likely_:

Incorrect. Remember the question was about revenue for the industry as a whole. The entire industry has benefited by taking some of the consumer surplus away from the customers now paying higher prices.

Incorrect. This would not be a reason since leisure travelers have time to plan vacations and will shop for lower prices, making their demand curve flatter than the one for business travelers.

Correct. This is true because a business class customer has a less elastic demand for flights than a vacationing consumer. This is due to time constraints where business customers often book flights on short notice to meet important clients or close sales and will pay what is necessary to be there.

failed since airline prices are transparent and easily matched by competitors.

succeeded because the demand curve for airline flights is steeper for leisure travelers.

succeeded because different classes of customers have different price elasticities for airline flights.