2. Now suppose European government gives $25 million export subsidy to Airbus. Airbus Not produce Produce $20 $0 50 million Produce -$5 $100 million million Boeing $125 $0 06 million $0 $0 Not produce a. Is there a Nash equilibrium after the subsidy? Is so, mark the Nash equilibrium in payoff matrix. b. Complete in the following welfare changes form: Rise in producer profits: +125 Fall in government revenue: Net effect on European welfare:

2. Now suppose European government gives $25 million export subsidy to Airbus. Airbus Not produce Produce $20 $0 50 million Produce -$5 $100 million million Boeing $125 $0 06 million $0 $0 Not produce a. Is there a Nash equilibrium after the subsidy? Is so, mark the Nash equilibrium in payoff matrix. b. Complete in the following welfare changes form: Rise in producer profits: +125 Fall in government revenue: Net effect on European welfare:

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter22: Price Takers And The Competitive Process

Section: Chapter Questions

Problem 4CQ

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