UPS and FedEx both struggle to deliver the surge of packages they receive during the end-of-year holiday

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UPS and FedEx both struggle to deliver the surge of packages they receive during the end-of-year holiday season. According to an article in the Wall Street Journal, in 2014, both firms considered charging firms such as Amazon rates that would be 10 percent higher for packages delivered during the week before Christmas. Such higher rates would likely have increased the profits of both firms. In fact, though, neither company raised rates during the holiday season of 2014. Use a payoff matrix to illustrate why the firms may have chosen not to raise rates. Assume that the two firms have a duopoly in the package delivery market and that the choices they face are to "Raise rates" or to "Not raise rates."

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Economics

ISBN: 978-0134106243

6th edition

Authors: R. Glenn Hubbard

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