Strategic Competition among the Few — Some Recent Developments in the Economics of Industry

  • J. Vickers
Chapter

Abstract

The title of this article is intended as a signal of two things. First, we are concerned with industries where several — but not many — firms are actually or potentially in competition with each other. Thus our topic is competition among the few,1 or oligopoly, rather than the polar extremes of textbook perfect competition and pure monopoly. Secondly, we are interested in the strategic nature of competition between firms, where the meaning of ‘strategic’ can be explained as follows:

If the essence of a game of strategy is the dependence of each person’s proper choice of action on what he expects the other to do, it may be useful to define a ‘strategic move’ as follows: A strategic move is one that influences the other person’s choice, in a manner favourable to one’s self, by affecting the other person’s expectations of how one’s self will behave. Schelling (1960, p. 150)

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© Macmillan Publishers Limited 1995

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  • J. Vickers

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