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Hardcover | Out of Print | 274 pp. | 6.25 x 9.3 in | August 1997 | ISBN: 9780262071826
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Games Businesses Play

Cases and Models


Game theory has come to dominate industrial organization economics, but business strategists continue to debate its usefulness. So far, empirical work on the application of game theory to business strategy has been too limited to force a consensus. As a (partial) remedy, Games Businesses Play uses detailed case studies of competitive interaction to explore the uses and limits of game theory as a tool for business strategists.Because they are analytical rather than descriptive, the case studies are not typical teaching cases. The cases are paired with customized game-theoretic models that cover a wide range of commitment decisions, from short-run commitments such as price to longer-run commitments such as capacity expansion and reduction, product and process innovation, and battles for market share. A variety of quantitative and qualitative techniques are used to test the models' predictions on case data. In addition the book sheds light on a number of other issues important to strategic management, including the resource-based view of the firm and the emergent theory of dynamic capabilities.


“Ghemawat's book draws on evidence from case studies to illuminate a vairety of game-theoretic models of competition. The book makes a significant intellectual contribution which will be appreciated by IO economists with an interest in business stategy, as well as by a braoder audience.”
Marvin B. Leiberman, Associate Professor, The John E. Anderson Graduate School of Management at UCLA
“Ghemawat'S approach will be useful for teaching students about the basis of game theory while introducing them to the application of strategic reasoning to business problems. It alsp will be valuable for researchers in industrial orginization because it will stimulate them to conduct case studies of companies as a means of testing ideas about strategic interaction. The blend of game theory and case studies in the book will enrich both areas, bringing realism and novel problems to game theorists and analytic methods to business strategists. Thus the game businesses play will prove to be enlightening as well as entertainig.”
Daneil F. Spulber
“This is the best kind of advertisement for game theory. Lively,provocative and challenging, it offers a fresh approach to a fascinatingarray of problems in business strategy.”
John Sutton, London School of Economics