上海复旦大学本科微观经济学Strat.MultistageGames.student.pptVIP

Strategy: Multistage Games Key issues preventing entry: simultaneous decisions preventing entry: sequential decisions creating and using cost advantages advertising Preventing entry consider a market with either 1 or 2 firms simultaneous entry decision: neither firm has an advantage that helps it prevent other firm from entering sequential decision: incumbent may have an advantage over firm deciding whether to enter Simultaneous decisions initially no gas stations physical space for at most 2 gas stations 2 firms consider opening a gas station at a highway rest stop Simultaneous Decisions Room for 2 firms firms have pure (dominant) strategies: both enter unique, pure strategy equilibrium Room for only one firm game is similar to game of chicken neither firm has a dominant strategy Problem with pure strategies game has two Nash equilibria in pure strategies: Firm 1 enters and Firm 2 does not Firm 2 enters and Firm 1 does not players don’t know which Nash equilibrium will result could collude: firm that enters could pay other firm to stay out of market these pure Nash equilibria are unappealing because identical firms use different strategies Mixed strategies mixed strategies: firm chooses between its possible actions with given probabilities firms may use same strategies if their strategies are mixed in our game, each firm enters with 50% probability result: Nash equilibrium in mixed strategies Mixed strategy equilibria Firm 2’s response if Firm 1 uses this mixed strategy, Firm 2 cannot do better using a pure strategy if Firm 2 enters with certainty, it earns $1 half of the time time loses $1 other half so its expected profit is $0 if Firm 2 stays out with certainty, Firm 2 earns $0 Nash equilibria firms play mixed strategy one firm plays pure strategy of entering and other firm plays pure strategy of not entering Games without pure-strategy equilibria some games have no pure-strategy Nash equilibrium, so mixed strategies must be used theorem (Nash, 1950):