Two airlines, A and B, are deciding to choose whether Atlanta or Chicago should
ID: 1181694 • Letter: T
Question
Two airlines, A and B, are deciding to choose whether Atlanta or Chicago should be their major hub. Given the diagram here, find all equilibria of this game.
Airline A
Atlanta Chicago
Airline B Atlanta $40M, $40M $85M, $60M
Chicago $60M, $85M $35M, $35M
Explanation / Answer
1st equilibria - Airline A - Chicago, Arline B - Atlanta
2nd equilibria - Airline A - Atlanta, Arline B - Chicago