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Strategic asymmetry

2005; Elsevier BV; Volume: 61; Issue: 3 Linguagem: Inglês

10.1016/j.jebo.2004.11.014

1879-1751

Mihkel M. Tombak,

Game Theory and Applications

In this study, an asymmetric two-stage game is examined, whereby one firm regards its rival's second stage strategic variable as a strategic complement while the other firm regards its rival's second stage strategic variable as a strategic substitute. This “strategic asymmetry” is shown to arise in a number of important games under certain conditions. The business strategy taxonomy of [Fudenberg, D., Tirole, J., 1984. The fat-cat effect, the puppy-dog ploy, and the lean and hungry look. American Economic Review Papers and Proceedings 74, 361–366] is extended to this situation, and the appropriate strategies for the incumbent are derived. It is argued that Boeing's reaction to the entry of Airbus into the intercontinental commercial jumbo jet market is an illustration of this scenario.