Nash equilibrium, Game Theory

Assuming that there are only 2 airline companies in the world, Delta and US Airways, what is the ((Nash) Equilibrium) or price that each company in the following matrix will charge? At that price, what profits do each company get?

Note that the first number listed in bold is the profit for Delta and the second number listed that is italicized is the profit for US Airways. 


 

US Airways

 

 

$500

$400

$350

 

    Delta

$500

$17000

               $17000

$14000

                   $20000

$10000

                  $23000

$400

$19000

               $14000

$16000

                   $16000

$13000

                  $19000

$350

$21,000

               $11000

$17000

                   $13000

$14000

                  $15000

Is there a way that Delta and US Airways could collude to increase profits? What might prohibit this collusion?

 

Posted Date: 2/25/2013 5:46:02 AM | Location : United States







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