• Airbus produces 3 a week and Boeing produces 4 a week. If Airbus stays out, it earns zero profit while Boeing enjoys a monopoly and earns a profits of $1 billion. The Payoff Matrix the payoff matrix as the economic profits for each firm in each possible outcome. Matrix Representation of Boeing-Airbus game Airbus Develop Do not develop Boeing Develop -50,-50 80,-30 Do not develop -30,80 0,0 11. 16.3 GAME THEORY. 14.4 GAME THEORY Because each firm has two strategies, there are four possible combinations of actions: • Both firms produce 3 a week (monopoly outcome). Boeing produces 3 a week and Airbus produces 4 a week. Game Theory: The Developer’s Dilemma, Boeing Vs.Airbus. Mike Shor Game Theory & Business Strategy Airbus vs. Boeing What a Difference Seven Years Make. The game theory and the situation surrounding the decisions of both the airliners clearly shows that the payoffs of one airline are not only dependent upon their own fundamental decision but also on the decision of the other airline as well. is not credible (for Boeing) 7. Game Theory: The Developer's Dilemma, Boeing vs. Airbus and other kinds of academic papers in our essays database at Many Essays. Game Theory: The Developer’s Dilemma, Boeing Vs.Airbus Committing large chunks of a company's resources to a single investment project is always a risky undertaking. Airbus-Boeing example Suppose Boeing is ahead in the development process, and Airbus is considering whether to enter the competition. Manageris recommande l'article Game Theory: The Developer's Dilemma, Boeing vs. Airbus, Strategy + Business • Boeing produces 3 a week and Airbus produces 4 a week. It becomes even riskier when a competitor is 16.3 GAME THEORY Equilibrium of the Duopolists Dilemma Both firms produce 4 a week. If Airbus decides to enter and develop the rival airplane, then Boeing has to decide whether to accommodate Airbus peacefully, or to wage a Applications of Game Theory in Aviation Manufacturing . In his paper,”Game Theory Analysis of Aircraft Manufacturer Innovation Strategies in the Face of Increasing Airline Fuel Costs,” MIT graduate student James Morrison applies a game theory framework to advise strategies that single-aisle aircraft manufacturers can employ to navigate a variety of market conditions. Boeing is considering that how it needs to respond to the decision made by Airbus regarding its plans of proceeding with or not with a $ 10 billion investment in the development of the company’s first commercial super jumbo jet which would also be the first super jumbo jet in the market. - BusinessWeek, 1993. 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