Untied and Air ’R’ Us are the only two airlines operating flights between Colleg

Question

Untied and Air ’R’ Us are the only two airlines operating flights between Collegeville and Bigtown. That is, they operate in a duopoly. Each airline can charge either a high price or a low price for a ticket.
The accompanying matrix shows their payoffs, in profits per seat (in dollars), for any choice that the two airlines can make. The Book Title, Edition, Authors, which chapter and problem is as follows:

Title : Microeconomics, 2nd Edition

Authors : Paul Krugman and Robin Wells

Chapter 15, Problem #7

Wanted to add it is on pages 412-413.

I could not find a way to copy and paste the matrix for problem A, and also it was not pasting in correct format the tables for problem B, I II III and IV.

This entire problem has me stumped, and really need your help. I thank you very much in advance!

Explanation / Answer

Generally in the United States there is no agreement setting the output levels of two oligopolists is not just unforceble it is illegal so it seems that a non coperative equilibrium only possible outcome                           

1 for the first problem if the united fixed a higher price for ticket the profit is 0$ for united states and the profit of AIR R us is 50 $ so generally us does not fix that price and on the other hand if the US will fix the lower price the prpfit of US is 20$ and also the profit of AIR R us is 20$ vice versa it is also being same in the case of AIR R us if the US and AIR R us fix an agreement and they jointly gets the profit of 20$ there is no problem if any one of these cheat the other and fix the low price for getting additiopnal profit the other

one gets losses because it is one shot game so both will try to gets the equal profits and finally the equilibrium is at 40$

2and for the problem b

1)if the united states plays allways charge low price when AIR R us allways charge the low price the pay off of UNited IS 20$

2)if the united plays allways charge the low price when AIR R us plays tit for tat the pay off of united is 50$ for the first year but it will decline 20$ profit for next year

3)if the united plays tit for tat when AIR R us plays all ways charge the low price the pay off of united is 0$ profit for the first year there after the pay off of united increases to 20$

4) united plays tit for tat when AIR R us also plays tit for tat the pay off of united is 40$ of profit

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