Question
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?
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