ECN121B – Industrial Organization II  Case Write-up: American Airlines Due: In-class before case discussion Instructions: The following questions relate to the case discussion “Predatory pricing and American Airlines.” Prior to answering these questions, please read the U.S. Department of Justice complaint in the case. You can a copy of it on Canvas as well as at: http://www.justice.gov/atr/cases/f2400/2438.pdf. Please limit your response to a single page. It can be typed or handwritten, single-spaced or double, but needs to be a single page. So pick your best argument for each question. You are welcome to discuss the case as a group, but each person must write their own response. Responses that are identical will not receive credit. Based on your reading of the case, respond to the following question(s): (a) What is the conduct to which the DOJ objects? Why do they object to the conduct? (b) Are conditions conducive to predatory behavior present in the airline industry? (c) Do you think that American Airlines’ pricing with respect to Vanguard Airlines predatory? Why or why not? In addition, please think about the following questions you read the case. Do not include a response in your case write-up. Rather, these questions are to help you prepare for the case discussion. Do the economics of the airline industry match well with models of competition we’ve studied up until this point? If so, what would be the prediction the different models of competition?

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