How lower airfare between paris and london impact the market

Assignment Help Macroeconomics

Reference no: EM13233792

"The operator of the tunnel that links Britain and France, Eurotunnel, said that commercial and tourist traffic using its car and coach shuttle service had fallen sharply in 2004, leading to a drop in operating revenues of 4%. Eurotunnel's chief executive, Jean-Louis Raymond, blamed cut-throat competition from budget airlines." (News story, January 2005)

a. If Mr. Raymond is correct, are the services of airlines and Eurotunnel substitutes or complements?

b. Use demand and supply analysis to explain how lower airfares between Paris and London impact the market for the shuttle services of Eurotunnel.

Reference no: EM13233792

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