6. Suppose that American Airlines and Delta Airlines are simultaneously choosing what prices to charge. The payoffs to different combinations of prices are in the table below: American Airlines PLow PMedium PHigh PLow ($15,000, $15,000) ($25,000, $22,000) ($40,000, $20,000) Delta Airlines PMedium ($22,000, $25,000) ($35,000, $35,000) ($38,000, $33,000) PHigh ($20,000, $40,000) ($33,000, $38,000) ($30,000, $30,000) a. Does either of the firms have a dominant strategy? Briefly explain. b. What is the Nash equilibrium in this interaction? Briefly explain.

6. Suppose that American Airlines and Delta Airlines are simultaneously choosing what prices to charge. The payoffs to different combinations of prices are in the table below: American Airlines PLow PMedium PHigh PLow ($15,000, $15,000) ($25,000, $22,000) ($40,000, $20,000) Delta Airlines PMedium ($22,000, $25,000) ($35,000, $35,000) ($38,000, $33,000) PHigh ($20,000, $40,000) ($33,000, $38,000) ($30,000, $30,000) a. Does either of the firms have a dominant strategy? Briefly explain. b. What is the Nash equilibrium in this interaction? Briefly explain.

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 9PA

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