Air New Zealand currently has a monopoly. Lufthansa is considering entering the industry. If Lufthansa does not enter the industry, Air New Zealand will have profits of $20 million and Lufthansa will have profits of 0. If Lufthansa does enter the industry, Air New Zealand can choose either to start a price war or to share the market. If Lufthansa enters and Air New Zealand starts a price war, both will face a loss of $10 million. If Lufthansa enters and Air New Zealand shares the market, Air New Zealand will have profits of $4 million and Lufthansa will have profits of $2 million.

Theonlybest pure strategy Nash Equilibrium for this game:

a.

Air New Zealand: Share Market; Lufthansa: Enter

b.

Air New Zealand: Price War; Lufthansa: Do not Enter

c.

Air New Zealand: Price War; Lufthansa: Enter

d.

Air New Zealand: Share Market; Lufthansa: Do not Enter

e.

None of the options