9781118041581

Competitive Strategy 417 profit. Thus, this is an equilibrium. In the lower-left equilibrium, the final price favors the seller, ...

the extensive formof the game.) The first move is MNF’s: whether to invest or not. If MNF does invest, the next move (at the tim ...

Competitive Strategy 419 honor an agreement only if it is more profitable to do so than to expropriate. This basic point suggest ...

entry. This possibility is depicted in Figure 10.2b’s game tree. Be sure to note the reversal in the order of the moves. Maintai ...

Competitive Strategy 421 commitment. If the incumbent can bind itself to a low-price policy (now and in the future), the new fir ...

some circumstances, incumbent firms actually may welcome costly government regulations if these policies have the effect of limi ...

Competitive Strategy 423 a low price is each firm’s dominant strategy. As a result, firms find themselves in a low-profit prison ...

The point of tit-for-tatis to deliver a limitedpunishment for defections from cooperation. If the competitor cuts price one peri ...

Competitive Strategy 425 ever delivers a medium-quality item at a premium price, the buyer in question refuses to pay a premium ...

breaks down. To see this, consider once again the example of price competi- tion played over a fixed number of periods. To find ...

Competitive Strategy 427 each. If airline A provides half the total flights, it claims half the total revenue, and so on. The se ...

of the airlines mounting exactly five flights. To confirm this, note that if the competitors fly five each (or 10 total), the ai ...

Summary 429 Nuts and Bolts Payoff tables are essential for analyzing competitive situations. A payoff table lists the profit ou ...

a. Identify the equilibrium outcome(s) in each of the three payoff tables. 430 Chapter 10 Game Theory and Competitive Strategy ...

Summary 431 c. Does the asymmetry in the countries’ sizes cause them to take different attitudes toward expanding output? Explai ...

a. Determine the (Nash) equilibrium (or equilibria) of the game. Does the superpower competition constitute a prisoner’s dilemma ...

Summary 433 a. Does either player have a dominant strategy? Does either have a dominated strategy? Explain. b. Find the players’ ...

player. By passing, the player increases the rival’s potential payoff by five units and reduces her own by one unit. Thus, as lo ...

Summary 435 D.C.–New York routes. In addition to service quality and dependability (claimed or real), the airlines compete on pr ...

dealer has available, the better is its chance of making a sale. In fact, a particular dealer’s share of the total market is pro ...