Answer Happy

Boeing and Airbus are the world's only major producers of large, wide-bodied aircrafts. But with the cost of fuel increasing and changing demand in the airline industry, the need for smaller regional jets has increased. Suppose that both firms must decide whether they will produce a smaller plane. We will assume that Boeing has a slight cost advantage over Airbus in both large and small planes, as shown in the following payoff matrix (in millions of U.S. dollars). Assume that each producer chooses to either produce only large, only small, or no planes at all. Boeing Not Produce Small Planes Large Planes Large Planes 10 150 -5 100 100 Airbus Small Planes 115 15 0 125 125 Not Produce 115 150 0 0 0 0 Is there any Nash equilibrium of this game? If so, how many Nash equilibrium out there and identify the Nash equilibrium from the payoff matrix. Explain how you find the Nash equilibrium of this game.