Proportion to per-passenger-per-day cost

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In 2008, cruise ship lines announced they were increasing prices from $7 to $9 per person per day because of increased fuel costs. According to one analyst, fuel costs for Carnival Corporation's 84-ship fleet jumped $900 million to $2 billion in 2008 and its cost per passenger per day jumped from $10 to $33. Assuming that these firms are oligopolistic and the outcome is a Nash-Cournot equilibrium, why did prices rise less than in proportion to per-passenger-per-day cost?

(Hint: Suppose that duopoly firms face a linear inverse market demand function p=a-bQ and their marginal costs are m, solve for the equilibrium price, then show how the equlibrium price changes as m changes.)

Reference no: EM131096729

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