Each of two aircraft manufacturers, Apex and Orbit, is considering whether to in

Question

Each of two aircraft manufacturers, Apex and Orbit, is considering whether to introduce a new aircraft. However, in their view the market is not big enough for both of them to introduce a new aircraft. Based on game theory framework:

How would you describe their strategies and expected outcomes (you may use hypothetical numbers in millions of US dollars)?

Do they have a dominant strategy? Explain

What would be the outcome? Explain

Fully answer each question in a maximum of 1/2 page or 250 words.

Explanation / Answer

ans....
a) Here clearly there is no demand for both of them, so either parties can either co-operate with each other which would benefit only one company( The one who introduces the aircraft) Other would loose market share. So they choose to confront each other by both introducing their own model which results in market being shared by them. The other strategy is to both not introduce at all which will serve as market failure
B) The dominant strategy is to introduce the aircraft into the market
C) The outcome would be shared market clearly as both have no incentive to co-operate.

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