Southwest to Buy 100 New Boeing 737 MAX Jets Southwest’s fleet is composed of entirely Boeing 737 jets. With a need to replace older jets, Southwest had been considering the Airbus A220 but executives decided to stay with the lower maintenance and training costs of a single fleet type.

a. In what type of market are commercial 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 commercial airplanes is efficient? Explain and illustrate your answer.