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# Assuming that there are only 2 airline companies in the world, Delta

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Assuming that there are only 2 airline companies in the
world, Delta and US Airways, what is the ((Nash)
Equilibrium) or price that each company in the following
matrix will charge? At that price, what profits do each
company get? Note that the first number listed in bold is
the profit for Delta and the second number listed that is
italicized is the profit for US Airways.
US Airways
\$500
\$400
\$350
Delta
\$500
\$17000
\$17000
\$14000
\$20000
\$10000
\$23000
\$400
\$19000
\$14000
\$16000
\$16000
\$13000
\$19000
\$350
\$21,000
\$11000
\$17000
\$13000
\$14000
\$15000
Is there a way that Delta and US Airways could collude to
increase profits? What might prohibit this collusion?

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US Airways
\$500
\$400
\$350
Delta
\$500
\$17000
\$17000
\$14000
\$20000
\$10000
\$23000
\$400
\$19000
\$14000
\$16000
\$16000
\$13000
\$19000
\$350
\$21,000
\$11000
\$17000
\$13000
\$14000
\$15000
Solution
Nash equilibrium is a solution concept of a non-

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Assuming that there are only 2 airline companies in the world, Delta and US Airways, what is the ((Nash) Equilibrium) or price that each company in the following matrix will charge? At that price, what profits do each company get? Note that the first number listed in bold is the profit for Delta and the second number listed that is italicized is the profit for US Airways. US Airways \$500 \$400 \$350 Delta \$500 \$17000 \$17000 \$14000 \$20000 \$10000 \$23000 \$400 \$19000 \$14000 \$16000 \$16000 \$13000 \$19000 \$350 \$21,000 \$11000 \$17000 \$13000 \$14000 \$15000 Is there a way that Delta and US Airways could collude to increase profits? What might prohibit this col lusion? US Airways \$500 \$400 \$350 Delta \$500 \$17000 \$17000 \$14000 \$20000 \$10000 \$23000 \$400 \$19000 \$14000 \$16000 \$16000 \$13000 \$19000 \$350 \$21,000 \$11000 \$17000 \$13000 \$14000 \$15000 Solution Nash equilibrium is a solution concept of a non - cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has any thing to gain by changing only their own strategy. If each player has chosen a strategy and no player can benefit by changing strategies whi ...
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