Airline Seat Share: A Study in False Optimization

Barcun, Seymour D.; Jeming, Peter

doi:10.1287/mnsc.20.2.146

Cited by 4 publications

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“…Another major approach to the study of oligopolistic competitive markets is represented by game theoretic models of competition (Friedman, 1958;Mills, 1961;Shakun, 1965Shakun, , 1966Baligh and Richartz, 1967;Krishnan and Gupta, 1967;Barcun and Jeming, 1973). The game theoretic approach typically involves some non-price marketing strategy variable (usually advertising) and analytical payoff functions for the competitors, with industry sales as a function of some 'industry-aggregate' strategy variable.…”

Section: Game Theory Approaches T O Competitive Strategymentioning

confidence: 99%

Metagame analysis of competitive strategy

Dutta

King

1980

Strategic Management Journal

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SUM MARYThe need for effective competitive strategy planning for a firm's survival and growth has long been recognized to be important. The identification and selection of good, or robust, market strategies must be based on the anticipation of the likely strategies of significant competitors, who should ideally be visualized as undergoing a similar process of assessing their own and other's goals and probable strategies.This paper reviews and evaluates the traditional economic and game theoretic approaches to competitive strategy analysis and presents an application of metagame analysis-an approach which has not previously been used in the strategic business environment. This approach, which appears to have some significant advantages over both economic and game theoretic approaches has been utilized and evaluated in a business firm (Dutta and King, forthcoming). An illustration of its use, which is based on a real-world application, is discussed. ECONOMIC MODELS OF OLIGOPOLYAmerican business is characterized by oligopolistic markets.' The problem of 'oligopolistic interdependence' has been extensively studied, usually by modelling pricing interdependence among oligopolists-the most celebrated being the pricing behaviour theories of Cournot (1963) and Chamberlain (1933). One of the most significant modern contributions in this field has been Cyert and March's, A Behavioral Theory of the Firm (1963) which analysed 'the effects of such variables as goal setting, goal adjustment, information flow, search patterns, and other organizational characteristics on the firm's decisions ' (1963: 420) in pricing and output determination in imperfect markets. Lambin (1976) points out that the interdependence that prevails among competing firms in most markets is multi-dimensional-not just price-based. He notes the virtual absence of any systematic attempt 'to study the firm's marketing behaviour in oligopoly with specific reference to the marketing mix concept. ' He argues (1976: 21): 'Since most firms do follow the marketing mix in setting their marketing strategy and reactions, classical oligopoly theory does not provide the appropriate framework to analyse actual competitive marketing behavior.' According to Scherer (1970) 'oligopolistic industries are found to include between 50 and 60 per cent of all

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Section: Game Theory Approaches T O Competitive Strategymentioning

confidence: 99%

Metagame analysis of competitive strategy

Dutta

King

1980

Strategic Management Journal

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Production and marketing decisions with multiple objectives in a competitive environment

Bracken

McGill

1978

J Optim Theory Appl

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Formulating Retail Location Strategy in a Changing Environment

Ghosh

Craig

1983

Journal of Marketing

101

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To design successful strategies retailers must take into account not only the marketing environment confronting them today but also anticipate possible competitive and demographic changes. This article presents a procedure to help retailers formulate a strategic location plan in a dynamic environment. The procedure involves a model for assessing site desirability, a criterion for selecting among alternative sites, and a heuristic to facilitate the computational procedure. A key element is the use of competitive equilibrium concepts to provide desirable strategies under a variety of future scenarios.

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Airline Seat Share: A Study in False Optimization

Cited by 4 publications

References 0 publications

Metagame analysis of competitive strategy

Metagame analysis of competitive strategy

Production and marketing decisions with multiple objectives in a competitive environment

Formulating Retail Location Strategy in a Changing Environment

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