Question: Smith Chapter 4 #4.4 Another famous pricing war took place in the U.S& airline industry following passage of the Airline Deregulation Act of 1978. We


Smith Chapter 4 #4.4 Another famous pricing war took place in the U.S& airline industry following passage of the Airline Deregulation Act of 1978. We imaging a scenario in which two airlines are pricing seats from Philadelphia to Chicago. There are 100 customers. Find the payoff matrix for each of the following simultaneous move games in which the airlines simultaneously choose between prices for seats and customers buy seats as indicated. For each game, find the dominant strategy solution, if it exists. (Note, the payoffs are the revenues.) Airline 1 chooses between $100, $200, and $300 per ticket. Airline 2 chooses between $100, $200, and $300 per ticket. The customers split evenly when both airlines charge the same price. Otherwise, 70 customers fly with the cheaper airline and the rest fly with the more expensive airline
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