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Given these expectations, we can then determine A’s optimal strategy: if A chooses not to expand, B would react with Expansion and A’s profit would be 2; if A chooses Expansion, then B’s best response would be not to expand and A’s profit would be 3. The Sub game–Perfect Nash Equilibrium is thus for A to choose Expansion and B to respond with no Expansion, yielding a payoff of (3,2). Note that the outcome of the sequential-move game differs significantly from the outcome of the simultaneous-move game.
The second wave refers to the emergence of strategic alliances and their business conduct, while the third discusses the evolution and importance of frequent flyer programmes. Moreover, Chapter 4 explores the emergence of low-cost carriers as a credible competition threat to the market dominance enjoyed by traditional airlines; it also deals with the sensitive topic of corporate rivalry in equity partnerships and the competition issues behind open skies agreements. Anne Graham discusses airport competition in Chapter 5.
The nature and consisting characteristics of visitor attractions are analysed and a useful classification of the product into core and augmented imagescape, tangible features and support services is provided. The chapter presents various policies on admission charges based on alternative market structure regimes – emphasis is given on monopolistic competition and oligopoly. In fact, a dualism seems to have emerged (a theme explored earlier in this introductory chapter) where an ‘aristopoly’ of few, large attractions coexists with a competitive fringe of smaller and perhaps less publicised ones.