组织经济学与管理学ch11 Strategy typology.pptVIP

Chapter 11 Strategy typology George Hendrikse Topics Decision sequence Reaction function Response to aggressiveness Comparative statics Nature of investment Profit maximising investment Applications 1. Decision sequence in the strategy-taxonomy Eight games will be distinguished in the strategy typology  2. Reaction function The reaction function is the profit maximising strategy of a firm, given the strategies of the other firms. The reaction function has a negative slope when there is quantity competition The reaction function has a positive slope when there is price competition Nash-equilibrium in a market with quantity competition Profits of firm 1 increase on R1 when the quantity produced increases Profits of firm 1 increase on R1 when the price increases 3. Response to aggressiveness An aggressive action is met by a passive response when there is quantity competition An aggressive action is met by an aggressive response when there is price competition Comparative statics results An investment is hard (soft) when there is a negative (positive) relationship between the investment level of the incumbent and the profit level of the entrant. The investment in the first stage of the game commits the incumbent to a certain location of R1 in the third stage of the game. If entry is inevitable, then the investment choice of the incumbent has to be such that nice / passive behaviour is elicited by the entrant. A market with strategic substitutes in which entry is inevitable Subgame perfect equilibrium profile in a market with strategic substitutes when entry is inevitable A market with strategic complements in which entry is inevitable Subgame perfect equilibrium profile in a market with strategic complements when entry is inevitable If entry can be deterred, then the incumbent has to invest in an aggressive profile in order to make the market unattractive for the entrant. A market with strategic substitutes in which entry can be deterred Subgame perfec