Suppose Boeing and Airbus Are Both Considering Expanding Their Plant

Suppose Boeing and Airbus are both considering expanding their plant capacity as a strategic move but can't observe their opponent's move until their own move has been determined.The following are time-discounted values of all future profit streams in billions of dollars.Which of the following strategies are Nash equilibria?

A) (Expand, Don't)
B) (Don't, Don't)
C) (Don't, Expand)
D) (Expand, Expand)
E) (b) and (c)
F) None are Nash equilibria.

Correct Answer:

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