Airlines sometimes find themselves in price wars. Consider the following game: Delta and United are the only two airlines flying the route from Houston to Omaha. Each firm has two strategies: charge a high price or charge a low price.

a. What (if any) is the dominant strategy for each firm?
b. Is this game a prisoner's dilemma?
c. How could repeated playing of the game change the strategy each firm uses?

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United High Low Delta earns Delta earns $20,000 -$10,000 High United earns $20,000 United eams $30,000 Dolta Delta earns Delta earns $0 $30,000 Low United earns United eams --$10,000 $0