Economics and rivalry in it

Southwest Airlines begins a “Bags Fly Free” campaign, charging no fees for a first and second checked bag. Does this situation best represent producer–producer rivalry, consumer–consumer rivalry, or consumer–producer rivalry? Explain.

The Southwest Airlines' “Bags Fly Free” campaign best represents producer-producer rivalry.

Consumers have so many different choices of airlines they can choose and generally, most of us would like to get the most out of our money on our flights. Producer such as Southwest wants to win our business by providing promotion such as “Bags Fly Free” to entice consumers not to worry about paying bag fees at the airport.

Airlines are competing with each other to win over a limited amount of customers. We as consumers want the best price and benefits with the least amount of stress.

This cannot be consumer-consumer rivalry because there are plenty of airlines available to consumers. Consumers are not limited to only Southwest Airlines so there won’t be any competitiveness among consumers to fight for a seat to get to their destination.

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This is not consumer–producer rivalry because there is no debate in pricing. Southwest provides a price for their flight and we as the customer can either buy or not buy from Southwest. At the same time, customers cannot bargain back and forth with Southwest for a seat to their destination.

This is definitely the producer-producer rivalry in which Southwest believes their business direction is not to charge bag fees will be a competitive advantage over many other airlines that charge bags to fly.