APPLIED ECONOMICS FOR MANAGERS SESSION 9 I BASIC TACTICS FOR FIRMS WITH MARKET POWER A PRICE TACTICS 1 TWO PART TARIFFS 2 BLOCK PRICING OR QUANTITY DISCOUNTS 3 MARKET SEGMENTATION B PRODUCT DESIGN ISSUES 1 BUNDLING TYING 2 VERSIONING 3 LOCATION ISSUES C PROFIT CREATION AND CAPTURE OF VALUE D PRICE DISCRIMINATION VERSIONING AND COMPETITION 1 INTENSIFICATION OF PRICE COMPETITION 2 MARKET NICHES AND MONOPOLISTIC COMPETITION 3 LOCATION AS A STRATEGY CHOICE II MARKETS WITH A FEW FIRMS GAME THEORY A THE NOTION OF A GAME STRATEGIC INTERACTION 1 PROFIT MAXIMIZING CHOICE DEPENDS ON STRATEGY OF RIVALS 2 GUESSING YOUR RIVAL S STRATEGY B NASH EQUILIBRIUM C THE RULES OF THE GAME 1 ORDER OF PLAY a SIMULTANEOUS OR SEQUENTIAL b IF SEQUENTIAL WHO MOVES FIRST 2 WHAT IS THE STRATEGIC VARIABLE a PRICE b QUANTITY c R D d ADVERTISING 3 WHAT DO THE PLAYERS KNOW a WHAT INFORMATION IS COMMON TO ALL PLAYERS b ARE THERE ANY ASYMMETRIES 4 DURATION OF PLAY IV COURNOT vs BERTRAND vs STACKELBERG A AN EXPERIMENT B INSIGHTS OF THE COURNOT MODEL 1 INEFFICIENCY IS A CONCEPT THAT CAN BE APPLIED TO LOTS OF SOCIAL INTERACTIONS 2 NUMBER OF PLAYERS MATTERS 3 FIRMS WITH DIFFERENT UNIT COSTS CAN COEXIST 4 FROM PUBLIC POLICY PERSPECTIVE OLIGOPOLY IS WORSE THAN PERFECT COMPETITION BETTER THAN MONOPOLY C A SECOND EXPERIMENT
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