Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Fairless's (2021) article from the WSJ illustrates how big companies are leveraging the economic rebound to increase their activities to the detriment of small and

Fairless's (2021) article from the WSJ illustrates how big companies are leveraging the economic rebound to increase their activities to the detriment of small and medium-sized businesses. This is a classical representation of the dictator's game where a dominant player decides how to split cash without other players' knowledge. The likelihood of splitting the prize equally is quite minimal as many dominant players would choose to keep the money or give the other player a small share of it. This is akin to what is happening in the economy post-corvid 19. Many large businesses with vast economies of scale have the resources and capability to stimulate the economy and offer a business for MSME but most have chosen to buy out small companies and invest in acquisitions. The resulting effect is an oligopoly market where a few players determine pieces, and there is no flow of information about their activities in the market. While the company would get profits in the short run, it would have difficulties with emerging competition in the long run. The big companies ought to have offered capital to smaller companies to spur the market and create more products and services that would increase the market share, leading to a larger market for all.

Game theory is applied in any interaction between individuals, individuals, and businesses, or between businesses. Game theory would require identifying the players, possible strategies, and the payoffs resulting from alternative strategies. Nash equilibrium is a set of strategies in which a firm is doing the best it can give the action of its rival. A dominant strategy, where the payoff is higher regardless of the strategy chosen.

In the example, the players are big companies and small and medium companies. How would you describe the game?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: James Jiambalvo

7th Edition

1119577721, 978-1119577720

More Books

Students also viewed these Accounting questions

Question

What is a honey pot?

Answered: 1 week ago

Question

3. Im trying to point out what we need to do to make this happen

Answered: 1 week ago