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Essay / Research Paper Abstract
This 5 page paper looks at a position where a new firm is considering entering an oligopoly. The potential application of game theory is assessed as a tool that may be used by the new firm in determining their strategy. The bibliography cites 4 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEnewgame.doc
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Unformatted sample text from the term paper:
economic theory can be useful. Game theory provides the predominant model for research into this area due to the way that the model is able to most accurately reflect or
represent the theoretical conditions where there are only a limited number of competitors (Ginevicius and Krivka, 2008, p208). General economic theories are useful in assessing all markets, but with only
a few competitors in a market there are fewer potential unknown influencing factors; however in all cases it should be noted there will always need to be assumptions, in addition
to this there will also be unknown or confounding factors that may be present. When a firm looks at entering an oligopoly there are looking at entering a market
where there are only a few competitors, or only a few competitors control the market. This may be seen as indicating conditions where there attractive market due to the lower
level of competition, and potential advantages associated with higher or superior profits (Nellis and Parker, 2006, p75). Game theory sees the different firms as players and the market place stargazing
as a game. The general approach in business when assessing a market is to look at the existing market conditions and consider
the way a firm may be able to compete. Where there is an oligopoly there are conditions where actions by the competitors have the potential to impact on the entire
industry, whereas in models where there is more competition, such as monopolistic competition and pure competition the actions of an individual firm will impact on their own performance but
are unlikely to impact on the industry Therefore, in the oligopoly the new entrant may consider the way in which the exiting firms in the market are likely to
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