Preemption versus Collaboration in a Duopoly

In the previous chapter we analyzed oligopoly models involving sufficient competitive advantage or asymmetry such that firm roles (who is the leader and who the follower) were arguably rather clear and determinable a priori. When firms are nearly identical, however, there are multiple Nash equilibri...

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Bibliographic Details
Published inCompetitive Strategy p. 359
Main Authors Benoît Chevalier-Roignant, Lenos Trigeorgis
Format Book Chapter
LanguageEnglish
Published The MIT Press 22.12.2011
Subjects
Applied mathematics
Communications
Determinism
Duopolies
Economic competition
Economic disciplines
Economics
Etiology
Finance
Financial economics
Financial investments
Financial market structures
Game theory
Imperfect competition
Investment analysis
Investment decisions
Investment plans
Investment return rates
Investment returns
Investment strategies
Mathematics
Metaphysics
Mixed strategy
Nash equilibrium
Negotiation
Negotiation strategies
Oligopolies
Philosophy
Planned investments
Return on investment
Social sciences
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Summary:In the previous chapter we analyzed oligopoly models involving sufficient competitive advantage or asymmetry such that firm roles (who is the leader and who the follower) were arguably rather clear and determinable a priori. When firms are nearly identical, however, there are multiple Nash equilibria in pure strategies and the more likely outcome of the game cannot be readily determined.¹ When no firm has a clear competitive (e.g., cost) advantage, there appears to be a “coordination problem” in determining who acts first and becomes the leader. Mixed strategies may give further insights and help determine what might happen when firms
ISBN:9780262015998
0262015994
DOI:10.7551/mitpress/8956.003.0019