Boeing and Airbus are competing to obtain an order for new planes from British Airways. British Airways intend to order 10 new planes and has has asked for bids from both companies.

Assume each manufacturer can offer a low price of $12m per plane or a high price of $15m per plane. Suppose also that the cost per unit for both manufacturers is $4m.

British Airways has announced that they will order all 10 planes from whoever offer them the lowest price. If both company offer the same price, they will split the order and order 5 aircraft from each company.

(a) What is/are the Nash equilibrium/equilibria in this game? Explain briefly.

(b) Suppose Boeing could move first in this game. This implies that they could submit a binding bid to British Airways that would become public before Airbus submitted their bid. Would it be advantageous for Boeing to do like this? Explain why or why not?