Intra‐industry structure and the response toward rivals

This paper is a study of the pricing behavior of airline monopolists toward potential entrant carriers from different strategic groups. The results suggest that formerly regulated carriers price lower when faced by potential entrants from the newly certified carrier group than they do when they face only potential entrants from their own group. These results are consistent with the heretofore‐untested hypothesis from Caves and Porter (1977) and Porter (1979) that rivalry is greater across groups than within groups.