第13章 Game Theory and Competitiive Strategy.ppt

THREATS, COMMITMENTS, AND CREDIBILITY 13.6 How did Wal-Mart Stores succeed whereothers failed? The key was Wal-Mart’s expansion strategy. The conventional wisdom held that a discount store could succeed only in a city with a population of 100,000 or more. Sam Walton disagreed and decided to open his stores in small Southwestern towns. The stores succeeded because Wal-Mart had created “local monopolies.” Discount stores that had opened in larger cities were competing with other discount stores. Other discount chains realized that Wal-Mart had a profitable strategy, so the issue became who would get to each town first. Wal-Mart now found itself in a preemption game. ENTRY DETERRENCE 13.7 To deter entry, the incumbent firm must convince any potential competitor that entry will be unprofitable. Empty Threats But what if you can make an irrevocable commitment that will alter your incentives once entry occurs—a commitment that will give you little choice but to charge a low price if entry occurs? ENTRY DETERRENCE 13.7 Strategic Trade Policy and International Competition The development and production of a new line of aircraft are subject to substantial economies of scale; it would not pay to develop a new aircraft unless a firm expected to sell many of them. Suppose it is only economical for one firm to produce the new aircraft. The Commercial Aircraft Market ENTRY DETERRENCE 13.7 Strategic Trade Policy and International Competition The Commercial Aircraft Market European governments, of course, would prefer that Airbus produce the new aircraft. Can they change the outcome of this game? Suppose they commit to subsidizing Airbus and make this commitment before Boeing has committed itself to produce. If the European governments commit to a subsidy of 20 to Airbus if it produces the plane regardless of what Boeing does, the payoff matrix would change. ENTRY DETERRENCE 13.7 In the early 1970s, DuPont and National Lead each accounted for about a third of U.S. titanium dio