Cooperative Game Study of Airlines Based on Flight Frequency Optimization

Table 1

Payoff matrix of two airlines in competition.

		Airline A
Airline B

is the cost of flights, , , , and represent different discounts, and . , , , and , respectively, denote the flight frequency in the four cases for airline A, and according to market competition rules. While for airline , . Based on the above relations, the matrix is going to be , and . Similarly, , and it can be concluded that is the Nash equilibrium in a noncooperative game. Thus, and , respectively, are the lowest fares provided by airlines A and B, and the corresponding flight frequency is at the medium high level.