AirPorter (AP)Don'tofferOfferDon't offerAP earns$8,000LimoZeenz (LZ)AP earns$10,000LZ earns$16,000LZ earns$8,000AP earns$15,000AP earns$12,000OfferLZ earns$12,000AirPorter offers the discount, but LimoZeenz does not.Both LimoZeenz and AirPorter do not offer the discount.There is no Nash equilibrium.LimoZeenz offers the discount, but AirPorter does not.LZ earns$6,000LimoZeenz and AirPorter and are the only two airport shuttle. Each firm must decideon whether to offer its customers a mid-week discount for airport transportation.The table above shows the payoff matrix for profits earned by each company basedon either offering or not offering the discount.Refer to the table above, what is the Nash equilibrium in this game?

There are two players : Air Porter (AP ) & LimoZeenz (LZ ) Strategy set of Player AP = Strategy…

Answered: LimoZeenz and AirPorter and are the…

LimoZeenz and AirPorter and are the only two airport shuttle. Each firm must decide on whether to offer its customers a mid-week discount for airport transportation.

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

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 12CQ

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Question

AirPorter (AP)
Don't
offer
Offer
Don't offer
AP earns
$8,000
LimoZeenz (LZ)
AP earns
$10,000
LZ earns
$16,000
LZ earns
$8,000
AP earns
$15,000
AP earns
$12,000
Offer
LZ earns
$12,000
AirPorter offers the discount, but LimoZeenz does not.
Both LimoZeenz and AirPorter do not offer the discount.
There is no Nash equilibrium.
LimoZeenz offers the discount, but AirPorter does not.
LZ earns
$6,000
LimoZeenz and AirPorter and are the only two airport shuttle. Each firm must decide
on whether to offer its customers a mid-week discount for airport transportation.
The table above shows the payoff matrix for profits earned by each company based
on either offering or not offering the discount.
Refer to the table above, what is the Nash equilibrium in this game?

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