Article ID: | iaor20082321 |
Country: | United States |
Volume: | 53 |
Issue: | 4 |
Start Page Number: | 537 |
End Page Number: | 549 |
Publication Date: | Apr 2007 |
Journal: | Management Science |
Authors: | Brandenburger Adam, Stuart Harborne |
Keywords: | game theory |
Both noncooperative and cooperative game theory have been applied to business strategy. We propose a hybrid noncooperative–cooperative game model, which we call a biform game. This is designed to formalize the notion of business strategy as making moves to try to shape the competitive environment in a favorable way. (The noncooperative component of a biform game models the strategic moves. The cooperative component models the resulting competitive environment.) We give biform models of various well-known business strategies. We prove general results on when a business strategy, modelled as a biform game, will be efficient.