Pricing under competition: the game
A realistic pricing game under competition
You are in charge of an airline and have to choose a pricing strategy for your planes departing in three months’ time. But you face a competitor on your market.
As you would in real life, you will both run your businesses and try to attract a wide variety of customers, each with different tastes, constraints, needs and different willingness to pay. This heterogeneity is also true for the off-peak period, where the global demand is lower.
Manage your prices over a three-year competition game
In this scenario, the game runs over three years, each with both a peak and an off-peak period (two rounds per year). For each round, as in the previous game, you have seats for sale and have to choose the prices at three periods of time before departure. You start with an initial cash of €50,000. Note that the profit (or loss) is added together at the end of each round, each year, and at the end of the game. As in the previous games, you need to finish the game with more than €50,000 to make a profit.
In the first year of this game, you have 1200 tickets for sale, corresponding to three round trips of a plane which seats 400. You may adjust the number of round trips in the following years.
The first year is similar to the warm-up game, but with 1200 seats to sell (Click to expand).
Choose your fleet and your round trips in years two and three
Starting in year two, new features will appear each year and you will also manage your fleet and schedules. You and your competitor will have to make strategic decisions regarding plane capacity and the number round trips prior to these pricing decisions.
Choose your capacity and frequency in the second and third years (Click to expand).
Since you and your competitor are making these decisions simultaneously, you may run very different types of airlines, with different capacities and strategies.
Your decisions may (or may not!) be very different from those of your competitor.
The choices you make about your fleet have some impact in the medium term and will affect the costs for both the peak and off-peak rounds.
Hints and instructions will be provided at each decision stage of the game.
Play the game and make a profit
Are you ready? In a new tab or browser window, log into the pricing simulation platform and create a new game in duopoly (right-click on the pink Launch button at the bottom of this page).
LAUNCH A NEW GAME SESSION (right click to open in a new tab)
In order to save your progress and retrieve your game in case of interruption, you must set up a personal ID and password:
- click on the Edit Profile menu
- in the Edit Login tab, enter your ID, then click on the Validate button
- in the Edit Password tab, enter your password (twice), then click on the Validate button
- in the Edit Team Name tab, enter the name of your airline, then click on the Validate button
- click the Go back to the game big blue button… and just play!
Do not forget that your goal is to make a profit, which does not necessary mean having the highest score.
The game should take no longer than 30 minutes from start to finish, and you should be able to make a profit by the end of the three years.
Finally, remember that if you do not succeed in making a profit by the end of the game, you can replay the game as many times as you want.
Make a profit and win points
This activity is assessed, and may earn you 12 points.
At the end of the game, if you succeeded in making a profit, the simulation platform will display four codes, each composed of two characters. Be sure to write down these codes very carefully. In the next step, you will be asked to enter them in a quiz, so that the 12 points can be recorded in your overall score.
Beware! You need to make a profit over the 3 years, which means that your overall score at the end of the game must be over €50,000 (your initial cash position).
If you’re not sure about how it works, our facilitators will do their best to help you. Please feel free to post any question. Please be aware that learners are taking this course at their own pace. With this in mind, please be considerate of other learners by not posting the answers to the game in the comments.
So… did you end the game with a profit? If so, jump to the next step in order to enter your winning code!
This game is provided by our partner Economics Games: Online Classroom Games for Teaching Economics (http://economics-games.com/)
Do you want more?
Create a multiplayer game to play with friends on the Economics Games platform (check the ‘SEE ALSO’ section below).
© By ENAC - Christophe Bontemps CC BY-NC-SA 3.0