The factors that affect the likelihood and sustainability of collusion Essay

The factors that affect the likelihood and sustainability of collusion in a specific industry - Essay Example Fundamentally, collusion is aimed at restricting or distorting competition within the market that the firms in that industry serve, and thereby reap the benefit of high and uncontrolled profitability. Therefore, this analysis seeks to establish the factors that affect the likelihood of collusion within the Air Travel Industry, and how such collusion is sustainable. Factors that affect the likelihood of collusion and sustainability in the Air Travel Industry Hypothetical Case: Air Canada and West Jet have been accused in colluding on fares on direct flights from Edmonton to Fort McMurray. The Air Travel Industry is an industry that is fairly competitive, considering that there are various airlines that operate within any given country or region, thus making the business of air travel fairly competitive3. Nevertheless, the Air Travel Industry also presents the opportunity for creating a monopoly or an oligopoly, considering that it is an industry that has low number of players. ... Therefore, there are high barriers to the entry for new firms, considering that economic barriers such as the high cost of entry prevent investors from being able to enter the Air Travel Industry4. Thus, barriers to entry form one of the structural features of the market and industry that make collusion more common and sustainable in this industry. The market and industry structure of Air Travel entails a high initial cost of entry, because purchasing and licensing an aircraft to be used for Air Travel purposes is a costly affair, in addition to the legal barriers that are brought about by the government tight control of the industry5. Further, the Air Travel Industry depends highly ion the benefits of the economies of scale in order to survive and thrive to profit earning levels, which requires that the firm operating in the industry should have several aircraft that operates in different destinations, both locally and internationally, to ensure that the route that earns low profits is compensated for, by the one earning high profits, thus the average profitability of the firm becomes substantial6. This is an aspect that serves to reduce the threat of new entrants, since the new entrants will be required to purchase several aircrafts, and undergo the restrictive government legislation procedures in order to finally enter into the industry, thus making the threat of competition low7. It is this low threat of competition that serves as an incentive to encourage the collusion between the few firms that have managed to operate in the industry, and thus make such collusion sustainable, considering that virtually all the firms operating in this industry have overcome the market challenges involved, and thus no single firm

Importing Cars from Overseas to Australia Essay

Importing Cars from Overseas to Australia - Essay Example It is located in Sydney and their most recent consignment is stipulated to come from US. The origin of these cars would be from Baltimore, USA and they would be transported to Australia. Other information: The consignment that needs to be taken care of is worth 50 cars and comes from a ware-house in Balti-more to Sydney in Peter Warren Automotive’s ware-house. The cars are Chevrolet Conair 1996 and weigh 4000 pounds each. LOGISTICS Solution: There are two viable methods which could be considered: Air Freight or Sea Freight We will offer insight into each of this method, what are the advantages and dies-advantages and then opt for the best method. Air Freight: Shipments to different parts of the world are not a huge ordeal today. Technology and globalization has made things a lot easier today. This was a feat which was unimaginable a few years ago. Air-freight shipping makes it easier to send merchandise between continents. It also makes it cheaper which otherwise would have be en a very expensive affair. Air freight makes distribution of product to any remote location in the world easier and possible. There are various other advantages those air-freight offers with it. If we opt for this method, it would mean that the lead-time would be shorter compared to the lead time offered by ship freights. This form of shipping is a guaranteed safe transport and arrival at the destination. Quiet unlike truck freight, there is no trouble finding the local airport and the route. Another very important and valuable service that comes with air freight would be the tracking facility. The cargo can be tracked at any point in time. On the whole air freight shipping is a very lucrative method of transport. It has its own advantages and disadvantages. However, still air shipping is the very feasible because of the low costs and shorter lead times. Things generally don’t go wrong with air-freight shopping. However, where our consignment is concerned, shipping 50 cars t hrough air space can turn out to be a huge ordeal and neither will the air space are able to accommodate so many cars at a go. Another option that can be considered is Sea Freight. OPTIMAL TRANSPORT MODE: Sea Freight Shipping Why Shipping? - Advantages and Disadvantages Since this is a huge consignment and needs to be dealt very carefully. The most obvious option to be considered for getting the cars to Sydney would be through Shipping. The cars would land at Sydney’s Port Kamala and from there would be taken to Peter Warren Automotives ware-houses and show rooms. The advantages of using sea transport are a plenty. Firstly ship transport gives logistics solution providers the liberty to conduct the transport in containers of different sizes. Secondly, this is the most ideal way of shipping for bulky goods like car that have longer lead times. Where the disadvantages are concerned, this mode of transport is slightly more costly. During the freight movement journey it would be difficult to keep track of the exact location of the goods in transit. Ship transport Options available: There are three different options that can be considered for shipping the cars over-seas from Baltic-more to Australia. They are as following: 1. Through RORO – Roll on and Roll Off 2. Cube Container shipping 3. Exclusive container. 1. RORO – Roll on and Roll off In RORO, there are decks of huge open hulled vessels. On