Analyzing Competitive Firms In An Oligopoly Market Structure Using Game Theory

Game Theory is used in this paper to address social problems and interactions to find an optimal solution for every encounter. Game theory is the study of mathematical models of strategic interaction between rational decision-makers [1]. It has applications in all fields of social science, as well as in logic and computer science. Originally, it addressed zero-sum games. Today, game theory applies to a wide range of behavioral relations and is now an umbrella term for the science of logical decision making in humans, animals, and computers. This paper represents games in three different ways, which are Normal form (or Strategic form), Extensive form, and Characteristic function form. This study works on games that are represented in the Normal and Extensive form. We will look into a spice manufacturing company which by its nature, encounters a lot of social interactions while working in its environment. Wither its outside or inside environment. Like competitors, consumers, and government for outside environment, and workers, managers, and lawyers inside the company for inside environment. In this case study, we will focus on Non-Cooperative games that a spice manufacturing company encounter as a firm working in an oligopoly market structure with its main competitor Brand Y. This study will address five problems that are related to social interactions. Starting with Marketing Campaign, Price War, Investing in R&D, Releasing a new product, and New Policy. We will analyze each game throw a serious of steps that are going to address: Game, Players, Strategies (Actions), Assumptions, Payoffs, Representations, and Analysis & Results. We will try to analyze these encounters using applications of famous games structure in Game Theory like the Prisoner Dilemma, Deadlock, and Extensive Form games.