Question: What strategic industrial or trade policy would be required (if any) in the United States and in Europe if the entries in the top left cell of the payoff matrix in Table 10-8 were changed to (a) (10, 10)? (b) (5, 0)? (c) (5, - 10)?

****12 (a), both Boeing and Airbus would be producing the aircraft without the need for any subsidy, and no strategic industrial and trade policy would be needed whether in the U.S. or in Europe.

Table 10-8:

Airbus

Produce Don’t Produce

Produce (- 10, - 10) (100, 0)

Boeing

Don’t Produce (0, 100) (0, 0)

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