29 29 30 33 33 37 36 36 33 33 39 41 41 44 44 45 46 46 47 48 124 125 124 130 131 132 133 2 3 4 6 5 7 8 10 11 12 9 14 14 14 16 18 18 21 22 24 24 26 27 21 29 66 69 70 71 72 73 78 77 79 80 81 83 84 85 86 88 89 90 92 95 97 99 100 109 109 110 110 115 116 117 119 120 20 21 22 23 24 25 28 29 30 32 38 39 43 43 44 45 4 46 4 47 4 48 4 54 55 4 56 4 54 58 59 60 61 62 63 64 64 65 Chapter 12 Development of a New Aircraft Boeing has head start Boeing will produce Airbus will not produce Boeing Produce Don’t produce Airbus -10, -10 100, 0 0, 0 0, 120 Produce Don’t produce Chapter 12 Development of a New Aircraft Governments can change outcome of game European government agrees to subsidize Airbus before Boeing decides to produce With Airbus being subsidized, the payoff matrix for the two firms would differ significantly Chapter 12 Development of an AircraftAfter European Subsidy Boeing Produce Don’t produce Airbus -10, 10 100, 0 0, 0 0, 120 Produce Don’t produce Chapter 12 Boeing Produce Don’t produce Airbus -10, 10 100, 0 0, 0 0, 120 Produce Don’t produce Development of an AircraftAfter European Subsidy Airbus will produce Boeing will not produce Chapter 12 Diaper Wars Even though there are only two major firms, competition is intense The competition occurs mostly in the form of cost-reducing innovation Small cost savings can lead to capturing of market share Both firms spend significantly on RD Chapter 12 Competing Through R D PG RD No RD RD No RD Kimberly-Clark 40, 20 80, -20 60, 40 -20, 60 Chapter 12 Competing Through R D Both spend on RD Dominant strategy Why not cooperate? Strengthening Bargaining Power Credibility Reducing flexibility PG RD No RD RD No RD Kimberly-Clark 40, 20 80, -20 60, 40 -20, 60 Chapter 12 Auctions Markets in which products are bought and sold through formal bidding processes Encourages competition that increases seller’s revenue Low cost of transactions Useful for unique items or those with fluctuating value Tokyo fish market Chapter 12 Auction Forma
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