2731l78

ECW2731Weeks 7 & 8

Weeks 7 & 8

Competition, market structures and

business decisions

ECW2731Weeks 7 & 8

Examination structure

1. Exam duration 120 minutes writing time 2. Reading time 10 minutes 3. Total number of questions 5 4. Students must attempt all questions 5. Use of calculators is permitted

Please note, original hand written notes or computer printouts or photocopies are not permitted in the exam this year.

ECW2731Weeks 7 & 8

Examination structure

Section 1. (Microeconomic theory from the Managerial Perspective) – attempt

Q 1-4Four theoretical questions. May include discussion of examples. Brief

answers are expected including definitions and diagrams where approporiated and/or specifically asked for.

Section 2. (Research Question) –attempt only one question 5 or 6

5. “Discuss possible impact of the introduction of carbon emission trading scheme in Australia on the following industries:

Electricity generationCar manufacturing and importTourism and hospitalityForestry

6. Apply question 5 to any country of your choice.

ECW2731Weeks 7 & 8

Weeks 7-8Competition, market structures and business decisions

Weeks 7-8Competition, market structures and business decisions

Structure

ManagerialEconomics

ManagerialEconomics

Weeks 5 - 6Production and Costs

Weeks 5 - 6Production and Costs

Week 2Basic economics principles: demand and supply.

Week 2Basic economics principles: demand and supply.

Week1Introduction. The nature of managerial economic decision making

Week1Introduction. The nature of managerial economic decision making

Week 9Pricing strategies and practices

Week 9Pricing strategies and practices

Week 10Business and Government.

Week 10Business and Government.

Week 11Capital budgeting

Week 11Capital budgeting

Week. 12

Research question

Business and current economic situation.

Week. 12

Research question

Business and current economic situation.

Weeks 3-4Demand analysis and estimation

Weeks 3-4Demand analysis and estimation

ECW2731Weeks 7 & 8

What is the market Structure What is the market Structure

Competition, market structures and business decisions

Competition, market structures and business decisions

How does competition affect business decisions in different

market structures?

How does competition affect business decisions in different

market structures?

Perfect competition; monopoly; oligopoly; monopolistic

competition

Perfect competition; monopoly; oligopoly; monopolistic

competition

Competitive strategies. Competitive strategies.

Measurement of market structures Measurement of market structures

Market strategies in different market structures.

Market strategies in different market structures.

Non-price competition.Non-price competition.

Multinational companies. Vertical and horizontal coordination.

Multinational companies. Vertical and horizontal coordination.

Learning objectives Learning objectives

ECW2731Weeks 7 & 8

Competition, market structures and business decisionsCompetition, market structures and business decisions

ReadingReading

Hirschey, Chapters 10, 12, 13, & 14

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7

Table 10.1 Characteristics of Market Types

Marketstructure

Examples

Number of

producers

Type of product

Power of firm over price

Barriers to

entry

Non-price competition

Perfect competitio

n

Parts of agriculture are

reasonably close

Many Standardized None Low None

Monopolistic

competition

Retail trade Many Differentiated Some LowAdvertising and

product differentiation

OligopolyComputers,

oil, steelFew

Standardized or

differentiatedSome High

Advertising and product

differentiation

Monopoly Public utilities OneUnique product

Consider-able

Very high

Advertising

ECW2731Weeks 7 & 8


Market structures Market structures

What is the market structure?

• The competitive environment in the market for any product is the market structure faced by the firm– Is measured in terms of

• the number of the actual buyers and sellers plus potential entrants

• Barriers to entry and exit

• Capital requirements

• Price vs Non-price competition

• Etc

– Potential entrants pose a sufficiently credible threat of entry to affect price/output decisions of incumbents

ECW2731Weeks 7 & 8

Factors that Shape the Competitive Environment

• Product Differentiation– R&D, innovation, and advertising are important in

many markets.

• Production Methods– Economies of scale can preclude small-firm size.

• Entry and Exit Conditions– Barriers to entry and exit can shelter incumbents

from potential entrants.

• Buyer Power– Powerful buyers can limit seller power.



ECW2731Weeks 7 & 8



Perfect competition

Perfect competition

OligopolyOligopoly

The firm in competitive marketsThe firm in competitive markets

MonopolyMonopoly

Non-perfect competitionNon-perfect competition

Monopolistic competition

Monopolistic competition

ECW2731Weeks 7 & 8


Market structures Market structures “Perfect competition” – competitive markets

Profit maximiser Identical product Very small share of the market Price-taker Produces a homogeneous product Perfect information No barriers to entry (legal, technological, or

resource) No technical progress No investment lag - Immediate implementation of

production decisions) Homogeneous goals of the owners and

managerial staff

ECW2731Weeks 7 & 8

• Examples of Competitive Markets– Agricultural commodities.– Some prominent markets for intermediate goods and

services.– Unskilled labor market.



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• Profit Maximization Imperative– Normal profit is return necessary to attract and maintain

capital investment.– Efficient firms can earn normal profit.– Inefficient firms suffer losses.

• Role of Marginal Analysis– Set Mπ = MR – MC = 0 to maximize profits.– MR=MC when profits are maximized.



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14

Profit maximization in a perfectly competitive market

• (see book)

• P = MC

• Marginal cost curve left of shutdown level (min. variable cost) is supply curve

• P = MR = MC = AC

• Firm produces at minimum of average costs! (optimal outcome for industry)

• In a constant-cost industry increase in supply will lead in the long term to constant prices (i.e. horizontal supply curve)

ECW2731Weeks 7 & 8



Marginal Cost and Firm Supply

Short-run Firm Supply– Competitive market

price (P) is shown as a horizontal line because P=MR.

– Firm’s marginal-cost curve shows the amount of output the firm would be willing to supply at any market price.

– Marginal cost curve is the short-run supply curve so long as P > AVC .

ECW2731Weeks 7 & 8

Long-run Firm SupplyMarginal cost

curve is the long-run supply curve so long as P > ATC.

In long run, firm must cover all necessary costs of production and earn a normal profit.



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Long Run Normal Profit Equilibrium

With a horizontal market demand curve, MR=P.

P=MR=MC=ATC.

There are no economic profits.

All firms earn a normal rate of return.

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Price, cost


Market structures Market structures Perfect competition

Breakeven point

Output per time period

MC

ATC

AVC

0

D

B

per unit

Qoff peak

Q peak

Poff peak

Ppeak

Poff peak – break even price off peak. At this price the firm expects to return only variable costs and can produce quantity Qoff peak

Ppeak- break even price at peak. This is when the firm expects to return both fixed and variable costs producing

quantity Qpeak

ECW2731Weeks 7 & 8

Competitive Market Supply CurveMarket Supply With a Fixed Number

of Competitors

Supply is the sum of competitor output.

Market Supply With Entry and Exit

Entry results in more firms, increased output, a rightward shift in the supply curve, and drives down prices and profits.

Exit reduces the number of firms, decreases the quantity of output, shifts the supply curve leftward, and allows prices and profits to rise for remaining competitors.



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Quantity per time period (millions)

10

8

6

4

2

0

Supply

50 100150200250300350400

Price per unit ($)

P = – $0.254 + $0.000025

Q

P = $40 – $0.0001Q

Demand


Market structures Market structures Perfect competition

Market price determination

• Negatively sloped demand curve

• Positively sloped supply curve

ECW2731Weeks 7 & 8


Market structures Market structures Monopoly

Basic Properties

• One firm in industry

• Profit-maximiser

• Faces market demand curve

• One product

• No close substitutes

• Price-maker

• No restrictions on resources

• Blockaded entry and/or exit

• Imperfect dissemination of information

• Opportunity for economic profits in long-run equilibrium.

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• Examples of Monopoly– Electricity utilities, – Gas – Water– Public Tramsport– Telecommunications



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Monopoly graph

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Profit Maximization in Monopoly Markets• Price/Output Decisions

• A monopoly firm is the market.

• Market and firm demand curve slopes downward.

• Monopoly demand curve is always above the marginal revenue curve, P = AR > MR.

• Monopoly position allows above-normal profits.P > AC in long-run

equilibrium.

• Set Mπ = MR - MC = 0 to maximize profits.

• MR=MC at optimal output.

ECW2731Weeks 7 & 8



Social Costs of Monopoly• Monopoly Underproduction

Monopolists produce too little output.

Monopolists charge prices that are too high.

• Deadweight Loss from MonopolyMonopoly markets creates

a loss in social welfare due to the decline in mutually beneficial trade activity.

There is also a wealth transfer problem associated with monopoly.

Under monopoly, consumer surplus is transferred to producer surplus.

ECW2731Weeks 7 & 8

Social Benefits From Monopoly

• Economies of ScaleMonopoly is sometimes the natural result of vigorous

competitive forces.In natural monopoly, LRAC declines continuously and one

firm is most efficient.Some real-world monopolies are government-created or

government-maintained.

• Invention and InnovationPublic policy sometimes confers explicit monopoly rights to

spur productivity.



ECW2731Weeks 7 & 8

Monopoly Regulation

• Dilemma of Natural MonopolyMonopoly has the potential for efficiency.Unregulated monopoly can lead to economic profits and

underproduction.

ECW3830 COMPETITION AND REGULATION



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Monopolists produce less, price higher than firms in competitive equilibrium

MR = P(1 + 1/)

• Situation is inefficient, insofar as the sum of consumer and producer surplus is concerned– What is producer and consumer surplus?

• Monopolist has to take demand conditions explicitly into account

• Why is no other firm entering the market???

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Other aspects of monopoly

• “Natural monopoly” if minimum of average cost occurs only at very high output level (minimum efficient scale) ==> there is only place for one firm in the market!

• Measure of monopoly power (markup of price over cost):

P MCmarkup

MC

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Sources of monopoly power• Natural monopoly (public utilities best example, railway tracks),

economies of scale,

• Capital requirements on production or big sunk costs on entry

• Patents (17 years), trade secrets (Coke)

• Exclusive or unique assets (minerals, talent)

• Locational advantage (popcorn shop in cinema – but in general you pay rent for these advantages)

• Regulation (TV, taxi, telephone in the past)

• Collusion by competitors

ECW2731Weeks 7 & 8


Market structures Market structures In the “real life”

• A typical firm, if it is not a small one, is not owner-managed

• Separation of ownership, long-term strategic and short-run current control (shareholders, board of directors, brunch managers) implies the segregation of objectives;

• Natural, economic and legal barriers

• Diversification (non-homogenous product, more than one kind of activity)

• Technical progress

• Different criteria for different time horizons (short-run operation vs long-run planning.

• Price-making

• Price/marketing strategies

• Imperfect information

• Investment lag

A “real” firm in a market place (compare to the “ideal” one):

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Sources of monopoly power• Natural monopoly (public utilities best example, railway tracks),

economies of scale,

• Capital requirements on production or big sunk costs on entry

• Patents (17 years), trade secrets (Coke)

• Exclusive or unique assets (minerals, talent)

• Locational advantage (popcorn shop in cinema – but in general you pay rent for these advantages)

• Regulation (TV, taxi, telephone in the past)

• Collusion by competitors

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What can a monopolist do?Erect strategic entry barriers

• Excessive patenting and copyright

• Limit pricing (set price below monopoly price)

• Extensive advertising to create brand name to raise cost of entry

• Create intentionally excess capacity as a warning for a price war

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Franchising „McFood“

• A Franchiser (mother company) gets a fixed percentage of sales,

• The franchisee is the residual claimant

• What are the incentives for the two partners?

• Other problems like number of shops in a region…

• Other examples??

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ECW2731Weeks 7 & 8

Contrast Between Monopolistic Competition and Oligopoly

• Monopolistic Competition

• Large number of sellers that offer differentiated products.

• Normal profit opportunity in long-run equilibrium.

• Oligopoly

• Few sellers.

• Economic profits are possible in long-run equilibrium.

• Dynamic Nature of Competition

• Timely market structure information is required for managerial investment decisions


Market structures Market structures Oligopoly and Monopolistic Competition

ECW2731Weeks 7 & 8


Market structures Market structures Мonopolistic competition

• The market consists of n mono-product firms;

• The products are viewed by the buyers as close though not perfect substitutes for one another;

• Therefore, each of the sellers is a monopolist of its particular product variant with a limited degree of monopoly power.

• Such a monopolist is enjoying a monopoly power and making economic profit during only a short period of time

• from the introduction of an unique product or technology

• until such a technology becomes available to rivals, or

• until a new “more innovative” product is introduced by a rival.

ECW2731Weeks 7 & 8

Q

Short-run Monopoly EquilibriumMonopolistically competitive firms take full advantage of short-run monopoly.



Price

Costs

Quantity

MR Demand

MCAC

Qmc

Pmc

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Long-run equilibrium same costs, lower demand and excess capacity – low output high price decision With differentiated products, P=AC at a point above minimum LRAC.P > MR = MC.



Price

Costs

QuantityMR1

D1

MC AC

MR2

D2

Price

Costs

Quantity

MC AC

Pmc

Qmc

MRD

Entry of new firms offering product substitutes shifts the demand and MR curves)

ECW2731Weeks 7 & 8

Long-run equilibrium– high output low price decision (corresponds to perfect Competition) With homogenous products, P=AC at minimum LRAC.

This is a competitive market equilibrium with homogeneous production.



Price

Costs

QuantityMR1

D1

MC AC

MR2

D2

Price

Costs

Quantity

MC AC

Pmc

Qmc

MRD

Qac

Pac

Long-run equilibrium same costs, lower demand and excess capacity – low output high price decision

With differentiated products, P=AC at a point above minimum LRAC.P > MR = MC.

ECW2731Weeks 7 & 8

• Oligopoly Market Characteristics

• Few sellers.

• Homogenous or unique products.

• Blockaded entry and exit.

• Imperfect dissemination of information.

• Opportunity for above-normal (economic) profits in long-run equilibrium.

• Examples of Oligopoly

• National markets for aluminum, cigarettes, electrical equipment, filmed entertainment, ready-to-eat cereals, etc.

• Local retail markets for gasoline, food, specialized services, etc.


Market structures Market structures Oligipoly

ECW2731Weeks 7 & 8

Cartels and Collusion

• Overt and Covert Agreements

• Cartels operate under formal agreements.

• Powerful cartels function as a monopoly.

• Collusion exists when firms reach secret, covert agreements.

• Enforcement Problem

• Cartels are typically rather short-lived because coordination problems often lead to cheating.

• Cartel subversion can be extremely profitable.

• Detecting the source of secret price concessions can be extremely difficult.



ECW2731Weeks 7 & 8



Cartels and Collusion

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Oligopoly Output-Setting Models

• Cournot Oligopoly

• Cournot equilibrium output is found by simultaneously solving output-reaction curves for both competitors.

• Cournot equilibrium output exceeds monopoly output but is less than competitive output.

ECW2731Weeks 7 & 8



Stackelberg Oligopoly

• Stackelberg model posits a first-mover advantage.

• Price wars severely undermine profitability for both leading and following firms.

• Price signaling can reduce uncertainty in oligopoly markets.

• Price leadership occurs when firms follow the industry leader’s pricing policy.

ECW2731Weeks 7 & 8



Stackelberg Oligopoly• Price leader sets

the price at P2

• Profit is maximised at Q1.

• The follower(s) will supply the combined output of Q4-Q1

• At P3- Follows will supply everything

At P1 – the leader will supply everything at no economic profit

ECW2731Weeks 7 & 8



Oligopoly Price-Setting Models• Bertrand

Oligopoly: Identical Products– The Bertrand

model focuses upon the price reactions.

– The Bertrand model predicts a competitive market price/output solution in oligopoly markets with identical products.

ECW2731Weeks 7 & 8

• Types of Games– Zero-sum game: offsetting gains/losses.– Positive sum game: potential for mutual gain.– Negative-sum game: potential for mutual loss.– Cooperative games: joint action is favored.

• Role of Interdependence– Sequential games: moves in succession. – Simultaneous-move game: coincident moves.

• Strategic Considerations


Market structures Market structures Game Theory Basics

ECW2731Weeks 7 & 8

Prisoner’s Dilemma

• Classic Riddle– Rational behavior can give suboptimal result.– Rationality can hamper beneficial cooperation.

• Business Application– Dominant strategy gives best result regardless of moves by

other players. – Secure strategy gives best result assuming the worst

possible scenario.

• Broad Implications



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Nash Equilibrium

• Nash Equilibrium Concept– Neither player can improve their payoff through a unilateral

change in strategy.– Nash equilibrium concept is broader than the concept of a

dominant strategy equilibrium.– Every dominant strategy equilibrium is also a Nash

equilibrium.– Nash equilibrium can exist where there is no dominant

strategy equilibrium.

• Nash Bargaining



ECW2731Weeks 7 & 8

Infinitely Repeated Games

• Role of Reputation– Infinitely repeated games occur over and over again without

boundary or limit.– Firms receive sequential payoffs that shape current and

future strategies.– Reputations for high quality give consumers confidence for

repeat transactions.

• Product Quality Games– In a one-shot game, poor quality can fool customers.– In an infinitely repeated game, poor quality is shunned by

customers.



ECW2731Weeks 7 & 8

Finitely Repeated Games

• Uncertain Final Period– Finitely repeated games have limited duration. – With end point uncertainty, a finitely repeated game mirrors

an infinitely repeated game.

• End-of-game Problem– Enforcing end-of-game performance is difficult.– Solution: simply extend the game!

• First-mover Advantages– Benefits earned by the player able to make the initial move

in a sequential move or multistage game.



ECW2731Weeks 7 & 8


Competitive strategies in Imperfectly competitive markets


Not all industries offer the same potential for sustained profitability;

Not all firms are equally capable of exploring the profit potential that is available.

An effective competitive strategy in imperfectly competitive markets must be founded on the firms competitive advantage.

Not all industries offer the same potential for sustained profitability;

Not all firms are equally capable of exploring the profit potential that is available.

An effective competitive strategy in imperfectly competitive markets must be founded on the firms competitive advantage.

ECW2731Weeks 7 & 8




A competitive advantage is a unique or rare ability to create, distribute or service valued by customers.

It is a business-world analogue to what economists call comparative advantage or when one nation or region of the country is better suited to the production of one product than to the production of some other product

Above-normal rate of return require a competitive advantage that cannot easily be copied

In production;

In distribution; or

In marketing

A competitive advantage is a unique or rare ability to create, distribute or service valued by customers.

It is a business-world analogue to what economists call comparative advantage or when one nation or region of the country is better suited to the production of one product than to the production of some other product

Above-normal rate of return require a competitive advantage that cannot easily be copied

In production;

In distribution; or

In marketing

ECW2731Weeks 7 & 8




Reasons for competitive advantage: Access to a unique resource

(Exclusive) Access to a mineral deposit

(Exclusive) Access to a material Efficient energy source Unique climatic condition Unique technology Unique (specially qualified or very talented) labour

force; or Access to a unique market

A university bookshop The rice market in Japan etc

Reasons for competitive advantage: Access to a unique resource

(Exclusive) Access to a mineral deposit

(Exclusive) Access to a material Efficient energy source Unique climatic condition Unique technology Unique (specially qualified or very talented) labour

force; or Access to a unique market

A university bookshop The rice market in Japan etc

ECW2731Weeks 7 & 8



Product differentiationProduct differentiation

Product differentiation refers to the increase in time of the number of

product categories suppled and the number of items in each category

Product differentiation refers to the increase in time of the number of

product categories suppled and the number of items in each category

Historically, a step from oligopolistic to monopolistic competition

Historically, a step from oligopolistic to monopolistic competition

ECW2731Weeks 7 & 8



Product differentiationProduct differentiation

A simple model of the reason for product differentiation

Price

QuantityQ

P

P*

• Considers constant quantity as well as non-changing AC and MC corresponding to this quantity

• Producing a little bit different product a firm might hope to charge a higher price

ECW2731Weeks 7 & 8



Barriers to entryBarriers to entry

Price

QuantityQ

P

P*

LAC

LAC*

Absolute cost advantages:

Ability of established firms to produce any given level of outputat lower unit costs than potentialentrants

Q*

ECW2731Weeks 7 & 8

Price

QuantityQ*

P

Economies of scale:

Ability of established firms

* To produce any given level of outputgreater than a certain level Q* at lower unit costs and * To restrict potential entrants who are not able to invest in that level of production

D

LAC




ECW2731Weeks 7 & 8

Price

QuantityQ*

P*

Product differentiation advantages:

Variety of demand curvesand common LAC.

Some firms have advantage of technology or specialisation and are facing demand curves to the right of the critical one.

D1

LAC

D2D2




ECW2731Weeks 7 & 8

Appear as the result of

• Ability to affect prices and

• Separation of ownership and managerial control

Appear as the result of

• Ability to affect prices and

• Separation of ownership and managerial control

* Managers’ aim at stability and increase in salaries*Stability may be achieved through the increase in the scale of operations*Increase in sales (not in profit) affects manager’s remuneration* Banks and retailers would prefer to deal with firms increasing the volume of sales


Non-profit-maximising competition.Non-profit-maximising competition.

ECW2731Weeks 7 & 8

DMR

AC

MC

Q

P, Cost

Profit maximisingdecision


Non-profit-maximising competition.


ECW2731Weeks 7 & 8

DMR

Q

P, Cost


Salesmaximisingdecision

• Increasing sales, the firm is moving to the right and downward the demand curve and, therefore, decreases price,

• The limitation is AC curve. Some profit should be earned anyway




ECW2731Weeks 7 & 8

DMR

AC

MC

Q

P, Cost





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Old sales maximising decision is a profitmaximising decision at a new level of average cost

Old profit maximisingdecision

New profit maximisingdecision

DMR

AC

MC

Q

P, Cost




ECW2731Weeks 7 & 8



Seller concentrationSeller concentration

Seller concentration refers to the degree to which production for a particular market or or in a particular industry is concentrated in the hand of few large firms

Seller concentration refers to the degree to which production for a particular market or or in a particular industry is concentrated in the hand of few large firms

• number of firms in the market

• size distribution of firms in the market

Measurement of concentration

ECW2731Weeks 7 & 8




The Australian Bureau of Statistics

8140.0.55.001 Industry Concentration Statistics

ECW2731Weeks 7 & 8




C2542 - Paint Manufacturing in Australia KEY COMPETITORS (www.ibisworld.com.au/static/iwabout/SamIndPart.asp)

MAJOR PLAYERS

Table: Market Share

Major Player Market Share Range

Orica Limited 22.00% - 25.00% (2004)

Wattyl Limited 17.00% - 19.00% (2004)

Barloworld Australia Pty Limited

9.00% - 11.00% (2004)

Akzo Nobel Industries Limited 7.00% - 9.00% (2003)

ECW2731Weeks 7 & 8

T h e f i r m s i n t h e i n d u s t r y a r e s o r t e da c c o r d i n g t o t h e s i z e o f t h e i r o u t p u t .X i - t h e o u t p u t o f t h e f i r m

X - t h e o u t p u t o f i n d u s t r y

X

Xi

- t h e s h a r e o f t h e f i r m i n t h e i n d u s t r yo u t p u t

T h e r a t i o o f r l a g e s t f i r m s i n t h e i n d u s t r yo u t p u t

CX

X

X

X

X

X

X

Xri

i

rr

1

1 2 . . .





ECW2731Weeks 7 & 8Census Measures of Market Concentration

• Concentration Ratios– Group market share data are called concentration ratios.– CRi = ∑ Xi, where Xi is market share of the ith leading firm.

– CRi = 100 for monopoly.– CRi ≈ 0 for a perfectly competitive industry.

• Herfindahl-Hirschmann Index– Calculated in percentage terms, the HHI is the sum of squared

market shares for all competitors. – HHI = ∑ Xi2, where Xi2 is squared market share of the ith firm.

– HHI = 10,000 for monopoly.– HHI ≈ 0 for a perfectly competitive industry.

• Limitations of Census Information– Slow reports hinder usefulness.– National statistics obscure local markets.

ECW2731Weeks 7 & 8

N


Diagrammatic approach

No of firms cumulated from the largest

Cu

mul

ativ

e %

of

outp

ut

100%

The curve of equaldistribution of shares of the market amongfirms

The curve of real (not equal distribution

This distance measures concentration




ECW2731Weeks 7 & 8


Multinational companies. Vertical and horizontal coordination.Multinational companies. Vertical and horizontal coordination.

DiversificationDiversification

Vertical coordinationVertical coordination

Multinational companyMultinational company

ECW2731Weeks 7 & 8

Invest in production facilities to produce a product D

A firm X producinga good A

Buys shares of a firm Y producinga good B

Invents a new product C



DiversificationDiversification

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Invest in production facilities or buys sharesof or coordinate activities with a firm producing an input D





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Invest in facilities or buys shares of or coordinate activities with a firm providing professional training for employees




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Invest in production facilities or buys sharesof or coordinateactivities with a firm using A as an input




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Invest in production facilities or buys sharesof or coordinateactivities with a firm using A as an input

Invest in or buys sharesof or coordinate activities with a firm specialising inthe selling of product A




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A firm producinga good A in a home country

Establishes branches in other countries

Buys share ofanalogous firmsin other countries

Undertake vertical coordination measures abroad

Conduct diversificationpractices abroad



Multinational companyMultinational company

2731l78

Documents

bertrand model

bertrand model

infinitely

game theory

big sunk costs

imperfectly

dominant strategy

perfectly