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During the height of the pandemic, many airlines substantially cut back on the number of flights offered each day. Now, as demand has increased as

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During the height of the pandemic, many airlines substantially cut back on the number of flights offered each day. Now, as demand has increased as people begin travelling again, Delta and United are considering adding flights to their current daily schedules. The following payoff matrix describes the payoffs associated with adding flights or maintaining their current number of flights, where payoffs are listed in millions of dollars.

Suppose that, in an effort to further incentivize Delta, the U.S. government decides to offer Delta an $8 million subsidy if they decide to increase their # of flights. This subsidy will be paid to Delta regardless of United's actions. Based on this subsidy, what is the Nash equilibrium in this subsidized game?

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United Airlines Increase Flights Maintain Increase 40 , 10 Flights 5, 5 Delta Maintain 10 , 30 8, 8

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