Suppose That Currently There Are No Airlines Serving the City

Multiple Choice

Suppose that currently there are no airlines serving the city of South Podunk. Both Accommodating Airlines and Friendly Flyers are looking to enter that market. (They are the only two.) The figure shows in extensive form the possible outcomes of the two firms' decisions. The payoffs represent, in thousands per month, the profit (or loss) the firm will realize from its decision. Which of the following statements is true about this game?

A) The market represented is a collusive duopoly.
B) The market represented is neither a collusive duopoly nor a Stackelberg duopoly.
C) The market represented is a Stackelberg duopoly.
D) The outcome of the game depends on who moves first into this market.