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Endogenous heterogeneity in strategic models: symmetry-breaking via strategic substitutes and nonconcavities

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  • AMIR, Rabah
  • GARCIA, Filomena
  • KNAUFF, Malgorzata

Abstract

This paper is an attempt to develop a unified approach to endogenous heterogeneity by constructing general class 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 non-concavities and some form of strategic substitutability. We provide a detailed discussion of the relationship of this work with Matsuyama’s symmetry breaking framework and with business strategy literature. Our framework generalizes a number of models dealing with two-stage games, with long term investment decisions in the first stage and product market competition in the second stage. We present the main examples that motivate this study to illustrate the generality of our approach.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2006008.

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Date of creation: 00 Feb 2006
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Handle: RePEc:cor:louvco:2006008

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Keywords: inter-firm heterogeneity; submodular games; business strategy; innovation strategies.;

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References

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  1. MaÅ?gorzata Knauff
    by Metablog Obserwatora Finansowego in Obserwator Finansowy on 2009-12-10 11:59:58
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Cited by:
  1. Evangelos Mitrokostas & Emmanuel Petrakis, 2011. "Organizational structure, strategic delegation and innovation in oligopolistic industries," Working Papers 2011/09, Economics Department, Universitat Jaume I, Castellón (Spain).

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