Transportation Economics/Agents/Solution2

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. Return Agents