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Individual problem 10-4: Examine the US passenger airline
industry using the Five Forces. Is this an attractive industry?
Why or why not?
Salvatore’s Chapter 11:
a) Discussion Questions: 12 and 13.
b) Problems: 2, 6, and 10.
DQ11: Do the duopolists in a Cournot equilibrium face a
prisoners’ dilemma? Explain.
Discussion Question 12: How did the 1971 law that banned
cigarette advertising on television solve the prisoners’
dilemma for cigarette producers?
Discussion Question 13: (a) What is the meaning of tit-for-
tat in game theory? (b) What conditions are usually required
for tit-for-tat strategy to be the best strategy?
Problem 2: From the following payoff matrix, where the
payoffs are the profits or losses of the two firsts, determine
(a) whether firm A has a dominant strategy, (b) whether
firm B has a dominant strategy, (c) the optimal strategy for
each firm, and (d) the Nash equilibrium, if there is one.
Problem 6: Explain why the payoff matrix in problem 1
indicates that firms A and B faces the prisoner’s dilemma
Problem 10: Given the following payoff matrix, (a) indicate
the best strategy for each firm. (b) Why is the entry-