Imperfect Competition

The other firm will increase its prices.

There will be no reaction from the other firm.

The other firm may lower its prices too.

The other firm will exit the market.

Do NOT match campaigns because increased promotion expenses reduce profits without guaranteeing increased sales.

Maintain current advertising levels allowing one firm potentially benefitting from free-riding on competitor efforts.

Reduce overall marketing efforts focusing resources elsewhere expecting competitor does same.

Match campaigns because failure may result in decreased brand loyalty despite constant pricing.

It necessarily leads to zero-sum game scenarios where individual success directly correlates to the detriment of others, limiting the establishment of stable equilibriums across the board.

It has little to no effect in establishing Nash equilibrium for differentiated goods, eliminating the possibility of pure strategies emerging.

Specialization tends to encourage joint profit maximization for all involved parties, resulting in frequent coordinated outcomes rather than independent decision-making.

Specialization can shift the equilibrium towards dominant strategies, producing unique goods and allowing those in control of the niche to secure a stable position regardless of rival moves.

The study of how people behave in strategic situations

The study of how the government regulates industries

The study of how firms compete in perfect competition

The study of how consumers make purchasing decisions

Producer surplus decreases as firms compete more intensely due to increased production.

The market achieves both productive and allocative efficiency with no government intervention needed.

Government tax revenues increase since more electric vehicles are sold in the market.

Consumer welfare increases due to lower prices, but there is a deadweight loss from overproduction.

Competitors may ignore changes assuming it won’t affect the market equilibrium significantly enough.

Other firms might decide on technological innovation as a response rather than changing their outputs directly.

Competitors might match output increases leading to reduced profits for all firms involved due to lower prices.

Competitors could interpret increased output as signaling decreased demand and subsequently reduce their own output levels accordingly.

It calculates the total revenue generated from all possible strategies a firm can employ.

It ensures that competitive behaviors among firms do not result in any costs whatsoever.

It shows how choosing one strategy results in losing out on the benefits that another strategy could have provided.

It helps firms completely eliminate any opportunity costs associated with their decisions.

Companies always engage in competitive bidding processes to win customers over through lower prices only.

They tend to keep prices stable to avoid price wars with competitors.

They frequently change prices on a day-to-day basis to increase sales volume.

Each company sets its prices independently without regard to competitors' actions.

Cartel agreement

Zero-sum game

Dominant strategy

Nash equilibrium

Inevitable collapse or failure

No participant can benefit by changing strategies assuming others remain constant

Collusion among participants

Guaranteed maximum profit for all players