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Symmetry-breaking in two-player games via strategic substitutes and diagonal nonconcavity: A synthesis

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  • Amir, Rabah
  • Garcia, Filomena
  • Knauff, Malgorzata

Abstract

This paper is an attempt to develop a unified approach to symmetry-breaking in strategic models arising in industrial organization by constructing two general classes of two-player symmetric games that always possess only asymmetric pure-strategy Nash equilibria. These classes of games are characterized in some abstract sense by two general properties: payoff nonconcavities and some form of strategic substitutability. Our framework relies on easily verified assumptions on the primitives of the game, and relies on the theory of supermodular games. The underlying natural assumptions are satisfied in a number of two-stage models with an investment decision preceding product market competition. To illustrate the generality and wide scope for application of our approach, we present some existing models dealing with R&D, capacity expansion and information provision, which motivated this study.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 145 (2010)
Issue (Month): 5 (September)
Pages: 1968-1986

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Handle: RePEc:eee:jetheo:v:145:y:2010:i:5:p:1968-1986

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Web page: http://www.elsevier.com/locate/inca/622869

Related research

Keywords: Submodular games Endogenous heterogeneity Asymmetric Nash equilibrium Inter-firm heterogeneity Supermodular games;

References

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Cited by:
  1. Roy, Sunanda & Sabarwal, Tarun, 2012. "Characterizing Stability Properties in Games with Strategic Substitutes," Staff General Research Papers 34778, Iowa State University, Department of Economics.
  2. Fey, Mark, 2012. "Symmetric games with only asymmetric equilibria," Games and Economic Behavior, Elsevier, vol. 75(1), pages 424-427.
  3. de Frutos, María-Ángeles & Fabra, Natalia, 2011. "Endogenous capacities and price competition: The role of demand uncertainty," International Journal of Industrial Organization, Elsevier, vol. 29(4), pages 399-411, July.
  4. Andrew Monaco & Tarun Sabarwal, 2012. "Games with Strategic Heterogeneity," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201240, University of Kansas, Department of Economics, revised Nov 2012.
  5. Andrew Monaco & Tarun Sabarwal, 2012. "Monotone Comparative Statics in Games with both Strategic Complements and Strategic Substitutes," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201236, University of Kansas, Department of Economics, revised Aug 2012.
  6. Arpita Chatterjee, 2014. "Endogenous Comparative Advantage, Gains From Trade and Symmetry-Breaking," Discussion Papers 2014-18, School of Economics, The University of New South Wales.
  7. Ledezma, Ivan, 2010. "Endogenous asymmetries in technology adoption and international trade," Economics Papers from University Paris Dauphine 123456789/5841, Paris Dauphine University.

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