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Oligopolistic Rivalries

In: Dynamic Decisions Energy PIVOT, Adaptive Moves, Winning BOUnCE

Author

Listed:
  • Ricardo G Barcelona
  • Franz Heukamp

Abstract

Oligopoly differs from pure competition in substantive ways. As oligopolists, each rival firm asserts its influence on prices, costs, or volumes. As their actions interact, their market shares as well as their costs vary, thereby altering the value of their firms. To adaptively respond, managers would need to “look forward, reason backwards” and glance sideways when aiming to profit from changing markets. Avinash K Dixit and Barry J Nalebuff (1993) succinctly describe what the managerial purpose is. They understood strategic thinking as an “art of outdoing an adversary, knowing that the adversary is trying to do the same to you.” By understanding the dynamic decision contexts, managers could identify adaptive pathways and the levers of value to inform their next strategic moves.

Suggested Citation

  • Ricardo G Barcelona & Franz Heukamp, 2022. "Oligopolistic Rivalries," World Scientific Book Chapters, in: Dynamic Decisions Energy PIVOT, Adaptive Moves, Winning BOUnCE, chapter 10, pages 511-582, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9781800611979_0010
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    Keywords

    Energy; Energy Investments; Option Games; Real Options; Climate Finance; Sustainable Investment; Dynamic Decisions; Decision Uncertainties; Renewable Energy; Fossil Fuel; Carbon Tax; Energy Transition; Behavioural Economics; Political Economy; Financial Economics; Strategy and Competition;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics

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