An Analysis of the Operation Model and Pricing Strategy of Airline Industries
Application of Game Theory in Airline Network Industries
An analysis of the operation model and pricing strategy of airline industries
Ying Qiao, Wenjia Wang, Shengyang Xu
2011/9/5
Catalog
Abstract
Keywords
Presumption
Model of the game
Introduction
Static game
Dynamic game with perfect information
Solution
Static game
Dynamic game
Conjecture
Reference
Abstract
We apply game theory into a specific game in airline market in order to review the games we discussed in this session. In order to be more practical, we also apply some knowledge in economics of network industries in the model. Finally, we get some simple conclusions and some conjectures which need us to prove in future classes.
Keywords
game theory; network industries; fully connected net; hub-and-spoke net;
static game; dynamic game; Nash equilibrium; subgame perfect equilibrium.
A review on game theory by a game in airline market
Group members: Ying Qiao, Wenjia Wang, Shengyang Xu
Presumption
There are only two companies in the airline market
The cost of an airline includes a constant part and a variable part
we have the cost of a firm as below:
C(q)=α+β(q)=30000+5q
The quantity of a firm is a function depending on both companies prices
the quantity of a firms demand can be expressed as below:
q_1=1000-5p_1+3p_2
q_2=1000-5p_2+3p_1
The consumers in airline market have an expected value on time, which is δ.
Model of the game
Introduction
There