Building a Win-Win Strategy Using Game Theory in a Competitive Environment (Subject to Antitrust Restrictions)

Abstract

The modern economic space is characterised by the actualisation of such market structure as an oligopoly, which necessitates its proper theoretical and empirical investigation. The aim of the paper is to analyse the use of game theory in the oligopoly market under the said conditions. The theoretical methods are the main scientific methods used in this study, in particular analysis, synthesis, historical and statistical methods. It was determined that the game theory is one of the most important relatively new mathematical theories applied in developing various types of economic models, including market analysis and companies activity strategy formation. It has been confirmed that the game theory is most often applied to oligopoly market analysis i.e. the market in which two or more big players conduct activities. Their decisions influence both the market in general and other “players”' income and position in the market by influencing the output price or the volume of output (depending on the model). It is stated that there are many ways to apply game theory as the main theory and to explain the future state of the market, incomes, losses, and producers' share in the oligopoly market due to different conditions and variables. This paper has reviewed the use of game theory subject to antitrust restrictions and when oligopolistic companies mutually benefit. It was substantiated that quite often in the models generated by economists, the mutual benefit of companies in an oligopoly market implies the existence of collusion between market participants in which companies benefit more than they would under the condition of competition between them (cartel). The practical value of the paper is in the theoretical substantiation of game theories in markets in general and in providing some practical strategies for companies' operations in markets, which will also be useful for students in their studies and for other scholars of economic disciplines