AirTrain and BigJet are considering starting nonstop service from Pittsburgh to Las Vegas. Assume that no other airlines serve this route. Market demand is such that if there is one airline serving...

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Answered 60 days AfterOct 28, 2021

Answer To: AirTrain and BigJet are considering starting nonstop service from Pittsburgh to Las Vegas. Assume...

Komalavalli answered on Dec 28 2021
122 Votes
1.
Pure strategy Nash equilibrium
a)
     
Bigjet
 
     
 
Airtrain
    
     
    serve
    not serve
    
    Serve
    -50,00,-5,000
    20000,0
    
    not serve
    0,2000
    0,0
A pure Nash equilibrium is a strategy specification for each player in which no player would gain from altering his strategy if the other players did not change their strategies. From above game table matrix we can say that pure strategy nash equilibrium is both firms serve.
b)
From above game tree we can say that Airtrain choose to serve first, pure strategy nash equilibrium is ($20,000,$0. If Airtrain choose...
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