Question: In 2008 cruise ship lines announced they were increasing prices
In 2008, cruise ship lines announced they were increasing prices from $ 7 to $ 9 per person per day because of increased fuel costs. According to one analyst, fuel costs for Carnival Corporation’s 84-ship fleet jumped $ 900 million to $ 2 billion in 2008 and its cost per passenger per day jumped from $ 10 to $ 33. Assuming that these firms are oligopolistic and the outcome is a Nash-Cournot equilibrium, why did prices rise less than in proportion to per- passenger- per- day cost?
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