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Two airline companies, Airtouch and Windward, operate a route from City X to City Y, transporting a mix of passengers and freight. They must le
Two airline companies, Airtouch and Windward, operate a route from City X to City Y, transporting a mix of passengers and freight. They must le their schedules with the National Transportation Board each year and cannot alter them during that year. Those schedules are revealed only after both companies have led. Each airline must choose between a morning and an evening departure. The relevant payoff matrix appears below, with the rst entry in each cell indicating Airtouch's daily prot and the second entry in each cell indicating Windward's daily prot. Windward Morning Evening Morning $1.000. $700 $700. $600 Airtouch Evening $750. S950 $900. $800 a. In which market structure do these rms operate? Explain. b. If Windward chooses an evening departure, which departure time is better for Airtouch? c. Identify the dominant strategy for Windward. d. Is choosing an evening departure a dominant strategy for Airtouch? Explain. e. If both rms know all of the information in the payoff matrix but do not cooperate, what will be Windward's daily prot
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