Airlines in the Asia-Pacific region are emerging as the biggest customers for aircraft makers Boeing and Airbus. The two firms predict that over the next 20 years, more than 8,000 planes worth up to $1.2 trillion will be sold there.
a. In what type of market are big airplanes sold?
b. Thinking of competition between Boeing and Airbus as a game, what are the strategies and the payoffs?
c. Set out a hypothetical payoff matrix for the game you’ve described in part (b). What is the equilibrium of the game?
d. Do you think the market for big airplanes is efficient? Explain and illustrate your answer.