BUSI 620_Research Paper - Running head OLIGOLPOLIES AND GAME THEORY Oligopolies and Game Theory Alana Piccone Liberty University Dr Obinna Olowu BUSI620

BUSI 620_Research Paper - Running head OLIGOLPOLIES AND...

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Running head: OLIGOLPOLIES AND GAME THEORY Oligopolies and Game Theory Alana Piccone Liberty University Dr. Obinna Olowu BUSI620: Global Economic Environment What are the links between Oligopolies and Game Theory? Can one exist without the other?
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OLIGOLPOLIES AND GAME THEORY 2 Abstract The goal of this paper is to examine the links between the market structure of oligopoly and the managerial economic business strategy of game theory. Oligopolies will be defined using the market structures definitions in Managerial economics and business strategy as well as explained through research. This definition of oligopoly will then be applied to the economic world and its relevance shown. In addition to this definition, the business strategy of game theory will be defined and explored. Research will help determine how the theory affects the oligopolies and vice versa. In order to prove the linkage, the game theory, Nash Equilibrium, will be used to illustrate the point. In addition, this analysis will also include the argument that game theory can be used in any market structure not just oligopoly. Comparisons will be made to other market structures as well as other managerial economic business strategies such a monopolies and perfect competitors. Throughout this paper managerial economics will be used to understand how oligopolies and game theory are codependent and if one is present, the other practice is present as well. The argument will also be made that oligopolies are not the only market structure that utilizes game theories. Ultimately, this paper will present sufficient evidence to of these managerial economic topics to prove the codependent argument and allow a conclusion to be drawn by the reader. Keywords: game theory, oligopolies, managerial economics, market structures, strategy
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OLIGOLPOLIES AND GAME THEORY 3 What are the links between Oligopolies and Game Theory? Can one exist without the other? Introduction There are many factors to conducting business to include process style, organizational design and employee management; however, something that firms tend to overlook is market structure. Market structure can shape the way a firm does business and vice versa. In general, once a firm has established where it fits into the market, it can set up the type of production and processes that will be used. Therefore, this paper will concentrate on the oligopoly market structure and the processes in which it employs, specifically the business strategy it uses. For oligopolies this strategy is known as game theory. There are different types of game theories that firms can use. One of these theories, Nash Equilibrium, will be explained to further understand the concept of game theories. This theory as well as further research will help aid in the proof as well as the opposing argument to the correlation between the market structure and the business strategy. The opposing argument will also introduce a different market structure and business strategy. Using this information, the research paper will show that the oligopoly
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  • Spring '13
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