1. There are two airline carriers, Delta and American, that are deciding how many flights to run from New York (JFK) to Houston (IAH) per day. Delta can run a morning flight (M), an afternoon flight (A), both flights or nothing. American can run an Evening (E) flight or nothing. The two firm's profits corresponding to each possible scenario of available flights is given below: Product (Flight) Selection Delta profit American profit 13 M M,A M,A,E A,E 20 8 -4 4 1 E 12 M,E A 11 8 9 a. Set up the payoff matrix for when the two firms simultaneously choose which flights to run. What is the Nash Equilibrium (or equilibria) of this game?
1. There are two airline carriers, Delta and American, that are deciding how many flights to run from New York (JFK) to Houston (IAH) per day. Delta can run a morning flight (M), an afternoon flight (A), both flights or nothing. American can run an Evening (E) flight or nothing. The two firm's profits corresponding to each possible scenario of available flights is given below: Product (Flight) Selection Delta profit American profit 13 M M,A M,A,E A,E 20 8 -4 4 1 E 12 M,E A 11 8 9 a. Set up the payoff matrix for when the two firms simultaneously choose which flights to run. What is the Nash Equilibrium (or equilibria) of this game?
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter17: Oligopoly
Section: Chapter Questions
Problem 5PA
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