Chlorine is prepared in the lab by upward displacement of air because

Chlorine is prepared in the lab by upward displacement of air because chlorine gas is denser than air.

This collection method is used for gases that are significantly heavier than air. When chlorine gas is introduced into an upright collection vessel, it sinks to the bottom, displacing the lighter air upwards and out of the container.

The final answer is $\boxed{\text{chlorine gas is denser than air}}$.