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1. Suppose two firms, Southwest Airlines and United Airlines, are competing in the commercial airline market in which downstream buyer preferences are identical. Suppose United Airlines charges some positive price for a major corporation to sign an agreement for discounted fares for its employees and Southwest Airlines doesn't.

a. Is airline travel a search good or an experience good? Explain.

b. Which firm is likely to provide the greatest value created? Explain.

Reference no: EM131464867

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