Oligopoly Behavior in the Airline Industry. Case Analysis This case illustrates the pricing behavior of firms that are oligopoly whose market is characterized by the relative few participating firms offering differentiated or standardized products or services. Such firms in an oligopoly have market power derived from barriers of entry that wards off potential participants. As seen in the case, it is clear that because there are a small number of US Airlines firms competing with each other, their behavior is mutually interdependent – thus, the strategies and decisions by one airline management affect managements of the other airlines whose subsequent decisions then affect the first airline. In the airline industry, such oligopolistic interdependence gives rise to a strategic behavior akin to chess moves- where, for example, what is best for American Airlines depends on what Northwest Airlines does, and what is best for Northwest Airlines depends on what American Airline does. The small number of firms competing with each other in the airline industry means that one airline’s changes in price immediately affects the demand for its competitors. The case suggests that behavior of firms in an oligopoly can be one of cooperation when they all sync their strategies to the obvious disadvantage of the consumer who has few alternatives e.g. inability to substitute other forms of travel for air travel usually because of time and distance constraints. As shown by data in the case, oligopolistic behavior can also be ruthless competition among the few firms in the industry. Thus, a lead leading airline would implement price changes at the end of the work week and watch other airlines react over the weekend before it makes adjustments on Mondays. Failure to follow such a price lead may trigger retaliation as exemplified by the cut-throat price war between American Airlines and