-The Above Figure Shows the Payoffs to Two Airlines,A and B,of

question 34

Essay

-The above figure shows the payoffs to two airlines,A and B,of serving a particular route.Is there a Nash equilibrium? What is it? Explain.

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Definitions:

Basis Risk

Risk attributable to uncertain movements in the spread between a futures price and a spot price.

Short Hedger

An investor who enters into futures contracts to protect against potential price declines in an asset they hold.

Futures Price

The agreed-upon price for the sale/purchase of an asset at a future date, as determined in a futures contract.

Metals

Elements that are typically hard, shiny, malleable, fusible, and ductile, with good electrical and thermal conductivity, used in a wide range of industrial and decorative applications.