Competitive Strategy

Addicted to Coursera as I am ...  learn how firms behave in situations in which strategic decisions are interdependent, i.e. where my actions affect my competitors' profits and vice versa. Using the basic tools of game theory, we will analyze how firms choose strategies to attain competitive advantage. Started Jul 1st 2013 (6 weeks long).

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In the first week, competitive situations in the form of games. Start out using two toothpaste manufacturers; actions that these two toothpaste manufacturers can take, in particular 'advertising' or 'not advertising' in a matrix, and use that matrix to analyse what might be optimal strategies in this context.

This is an introduction into two very important concepts of game theory: Nash Equilibria and Prisoners’ Dilemma. We then go one step further; change a game from a simultaneous game (two players make decisions at the same time) to a sequential game (one of the players moves first and the second player then follows).


  • Introduction

  • Simultaneous Games I: Game Setting

  • Simultaneous Games II: Eliminating Dominated Strategies

  • Simultaneous Games III: Nash Equilibrium

  • Simultaneous Games IV: Prisoners’ Dilemma

  • Sequential Games I: Game Setting

  • Sequential Games II: Backward Induction

  • Sequential Games III: Credible Threats

  • Wrap Up

Additional readings

  • Camerer, C. "Redirecting reserach in business policy and stragegy". Strategic Management Journal 6(1) 1985. pp. 1-15.

  • Dixit, A. and Skeath, S. "Games of strategy". Norton & Company 2004, second edition. Part II.

  • Saloner, G. "Modeling, game theory, and strategic management". Strategic Management Journal 12(S2) 1991. pp. 119 - 136.

Week 1 done. In the bag and the weekly quiz completed. Yee Har.