It is a refinement of the concept of subgame perfect equilibrium to extensive form games for which a pay-off relevant state space can be identified.
As in the rest of game theory, this is done both because these are easier to find analytically and because they are perceived to be stronger focal points than asymmetric equilibria.
[citation needed] For examples of this equilibrium concept, consider the competition between firms which have invested heavily into fixed costs and are dominant producers in an industry, forming an oligopoly.
Presumably, the two airlines do not have exactly the same costs, nor do they face the same demand function given their varying frequent-flyer programs, the different connections their passengers will make, and so forth.
The Markov perfect equilibrium model helps shed light on tacit collusion in an oligopoly setting, and make predictions for cases not observed.
One strength of an explicit game-theoretical framework is that it allows us to make predictions about the behaviours of the airlines if and when the equal-price outcome breaks down, and interpret and examine these price wars in light of different equilibrium concepts.