Lesser Antilles Lines: The Island of San Huberto (a)

10 Pages Posted: 21 Oct 2008 Last revised: 9 Oct 2018

See all articles by Phillip E. Pfeifer

Phillip E. Pfeifer

University of Virginia - Darden School of Business

James Gelly

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Abstract

In this case, the situation is a classic duopoly. Two shipping firms are in a price war over the market for containerized shipping to and from a small Caribbean island. The case presents a table of contributions to both firms as a function of their prices. This table serves as a basis by which the class can explore the concepts of Nash equilibrium, price leadership, and prisoner's dilemma. It is also available with the case as a student spreadsheet (QA-0355X). See also ''Lesser Antilles Lines (B)'' (UVA-QA-0641) and ''Lesser Antilles Lines (C)'' (UVA-QA-0670).

Excerpt

UVA-QA-0355

Rev. Apr. 27, 2016

Lesser Antilles Lines: The Island of San Huberto (A)

James Vaughan looked over the balcony railing to the sea beyond. As he settled comfortably into the rattan chair, he watched the sweat roll down the side of his water glass. He sniffled repeatedly. After three months in the Caribbean, Vaughan had become somewhat acclimatized, but the effects of a summer cold lingered. With a sigh, he thought of his imminent return to the United States for the second year of his MBA program. San Huberto was his last assignment for the summer.

The evening's sea breeze blew across the balcony of the Gran Hotel San Huberto, and Vaughan thought about the recommendations he would make about pricing strategy to his summer employer, Lesser Antilles Lines (LAL). LAL was a very successful containerized shipping firm moving cargo between Fort Lauderdale, Florida, and about 15 Caribbean islands. Vaughan was hired to investigate eight potential new markets in the Caribbean and Central America. On his way back to Fort Lauderdale, he received a call asking him to stop in San Huberto. Because LAL was embroiled in a particularly vicious price war, San Huberto was the only market in which LAL was not producing impressive earnings. Vaughan was asked to survey the scene and evaluate LAL's pricing strategy for the island.

Lesser Antilles Lines

. . .

Keywords: competitive dynamics, game theory, price leadership, pricing, international case, diversity case

Suggested Citation

Pfeifer, Phillip E. and Gelly, James, Lesser Antilles Lines: The Island of San Huberto (a). Darden Case No. UVA-QA-0355, Available at SSRN: https://ssrn.com/abstract=1283392

Phillip E. Pfeifer (Contact Author)

University of Virginia - Darden School of Business ( email )

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HOME PAGE: http://www.darden.virginia.edu/faculty/Pfeifer.htm

James Gelly

affiliation not provided to SSRN

No Address Available

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