In the Airbus-versus-Boeing example in Figure 11.7, what strategy should the EU governments follow if the upper-left box ( a ) gives Airbus and Boeing each a sure gain of 5 or ( b ) gives Boeing a gain of 5 and Airbus a gain of 0? In each case, should the EU offer a subsidy to Airbus? Explain.

Data From  Figure 11.7

Transcribed Image Text:

FIGURE 11.7 A Two-Firm Rivalry Game with No Payoff Matrix, with No Subsidies: Airbus gains Government Subsidies: Airbus versus Boeing this Boeing gains this Airbus produces Boeing produces -8 Boeing does not produce 0 -8 Airbus does not produce 100 0 100 0 0