< Transportation Economics < Agents
Problem Extension
3. What happens if there is a third price $300, for which demand is 375 passengers.
Reformulate the problem.
Solution
| ' | ' | ' | 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.
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