Consider a market dominated by just two airlines, American and United. Each airline can choose to restrict capacity and charge a high price or expand capacity and charge a low price. If one of the two airlines expands capacity and reduces the price and the other does not, the airline that reduces price will be able to capture customers from the other airline. The economic profits for each outcome are illustrated in the accompanying payoff table. United charges United charges a high price a low price American receives American receives $20 billion in profit $5 billion kiss American charges a high price United receives United receives $15 billion in profit $20 billion in profit American receives American roccives $25 billion in profit $0 in profit American charges a low price United receives United receives $5 billion loss 50 in profit Consider what happens if American and United are playing a one-shot, simultaneous-move game. a. The Nash equilibrium for a simultaneous-move game is that American charges and United charges - This game an example of a Prisoner's Dilemma. Now suppose that United and American play this game as a repeated game that lasts for two periods. Determine what outcome occurs in the second period. b. In the second period American charges and United charges Now suppose that United and American play this game for an indeterminate number of periods so that neither American nor United know when the game will effectively end. Each will play a Grim Trigger strategy. In this case the payoff table will become: United charges United charges a low price a high price (deviates from cooperati (continues to cooperate) on American receives American roccives American $20 billion in profit today $5 billion loss today and charges and in every period in $0 profit in every future a high Future. period. price (continues United receives United receives $20 to cooper $15 billion in profit today billion profit today and $0 atej and in every period in profit in every future Future. period American receives $25 American American receives $0 billion profit today and $0 charges profit today and in every a low profit in every future period in future. period price [deviates f United receives $0 profit United receives $5 billion rom coope today and in every period loss today and $0 profit in ration) in future every future period. C. Identify the Nash equilibrium or equilibria for this game with an indeterminate number of periods. American charges a low price and United charges a high price. American charges a high price and United charges a high price. American charges a high price and United charges a low price. American charges a low price and United charges a low price