Week 1
Review of simultaneous games in a form of payoff matrix. Definition of a dominating strategy (no other strategy can do better) and domination strategy elimination as a solution for the game. Nash equilibrium (a combination of strategies no player can deviate unilaterally from his current strategy to improve his payoff). Prisoner's dilemma as example. Sequential games in a form of decision tree, backward induction as a way to solve game. Credible threats and how to make threats credible.
Week 2
Reasons for cooperation. Sometime competition is not a in best interest of firm. Ways to ensure cooperation infinite repetition and commitment. Factors enhancing cooperation: high value of a future payoffs. Factors hindering cooperation: large number of competitors, low punishment. Aggressive commitment. Cooperative commitment in a form of reputation building (make the company known as reliable cooperator, make it known that you treat others fairly), self-binding commitment (make investment that convinces potential partners that one is committed to act cooperatively), most favored customer clause (promises the customer that it will get refunded if another customer i charged a lower price in the future - so price reduction become not an option)
Week 3
Complements. Reason to support others. Reasons to produce complements - cross subsidies, bundling, increase lock-in.Strategic partnership in a form of organisational or/and economical integration.
Week 4
Choice of market: Market attractiveness, structural and strategic barriers.
Entry strategies: Commitment/Value chain reconfiguration, Judo economics/Niche market.
Entry Deterrence: Structural entry barriers/Commitment, Limit pricing/Predatory pricing. Pre-emption.
Week 5
Stages of R&D. Types of innovations: process and product, drastic and incremental. Initiatives to innovate: competitive market, monopolist, monopolist in a threat of entry.
Week 6
Bertrand paradox,. Vertical and horizontal differentiation. Generic strategies: cost leadership, differentiation, focus.
Review of simultaneous games in a form of payoff matrix. Definition of a dominating strategy (no other strategy can do better) and domination strategy elimination as a solution for the game. Nash equilibrium (a combination of strategies no player can deviate unilaterally from his current strategy to improve his payoff). Prisoner's dilemma as example. Sequential games in a form of decision tree, backward induction as a way to solve game. Credible threats and how to make threats credible.
Week 2
Reasons for cooperation. Sometime competition is not a in best interest of firm. Ways to ensure cooperation infinite repetition and commitment. Factors enhancing cooperation: high value of a future payoffs. Factors hindering cooperation: large number of competitors, low punishment. Aggressive commitment. Cooperative commitment in a form of reputation building (make the company known as reliable cooperator, make it known that you treat others fairly), self-binding commitment (make investment that convinces potential partners that one is committed to act cooperatively), most favored customer clause (promises the customer that it will get refunded if another customer i charged a lower price in the future - so price reduction become not an option)
Week 3
Complements. Reason to support others. Reasons to produce complements - cross subsidies, bundling, increase lock-in.Strategic partnership in a form of organisational or/and economical integration.
Week 4
Choice of market: Market attractiveness, structural and strategic barriers.
Entry strategies: Commitment/Value chain reconfiguration, Judo economics/Niche market.
Entry Deterrence: Structural entry barriers/Commitment, Limit pricing/Predatory pricing. Pre-emption.
Week 5
Stages of R&D. Types of innovations: process and product, drastic and incremental. Initiatives to innovate: competitive market, monopolist, monopolist in a threat of entry.
Week 6
Bertrand paradox,. Vertical and horizontal differentiation. Generic strategies: cost leadership, differentiation, focus.
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