Transportation Economics/Agents/Solution2

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Problem Extension[edit]

3. What happens if there is a third price $300, for which demand is 375 passengers.

Reformulate the problem.

Solution[edit]

' ' ' American '
$200 $300 $400
United $200 [0,0] [50000,-50000] [50000, -50000]
$300 [-50000, 50000] [6250, 6250] [62500, -50000]
$400 [-50000, 50000] [-50000, 62500] [0,0]

At [300,300] Each airline gets 375/2 share = 187.5 pax * $300 = $56,250, cost remains $50,000

At [300, 400], 300 airline gets 375*300 = 112,500 - 50000

What is the equilibrium in a non-cooperative, 1 shot game? [$200,$200].

What is equilibrium in a repeated game?

Note: No longer zero sum.

Return[edit]

Agents