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USA Airlines is a major airline carrier for both domestic and international travel. The company guarantees the “lowest price” ticket for travel within the United States. In order to get the lowest price airfare, the customer needs to book a flight with USA Airlines and show the booking agent a computer-generated quote from any other airline in the country for the same travel route at a lower rate. USA Airlines will match the rate, plus give the customer an additional 10% discount. USA Airlines has entered into a contract with several regional carriers, which requires them to also price below the competition in order to do business with USA Airlines customers. The “lowest price” ticket guarantee does not apply for travel on Monday mornings and Friday evenings, which are busy travel times for business travelers.
1. Do these pricing practices of USA Airlines violate any anti-trust laws? Why or why not?
2. Why is USA Airlines not offering a price guarantee for flights on Monday mornings and Friday evenings? Do you agree with this policy? Explain briefly.
3. What other factors should USA Airlines consider before implementing these pricing policies?
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