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Drugs, guns, and targeted competition

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  • Dubovik, Andrei
  • Parakhonyak, Alexei

Abstract

We consider a dynamic competition game involving three players, in which each player can vary the extent of his competition on a per-rival basis. We call such competition targeted. We show that if the players are myopic, then the weaker players eventually lose the game to their strongest rival. If instead the players are sufficiently far-sighted, then all three players converge in their power and stay in the game. We develop our model in application to drug wars, but the approach of targeted competition can be applied to competition between firms or political parties, or to warfare.

Suggested Citation

  • Dubovik, Andrei & Parakhonyak, Alexei, 2014. "Drugs, guns, and targeted competition," Games and Economic Behavior, Elsevier, vol. 87(C), pages 497-507.
    • Handle: RePEc:eee:gamebe:v:87:y:2014:i:c:p:497-507
    DOI: 10.1016/j.geb.2014.06.007
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    Cited by:

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    2. Luca Colombo & Paola Labrecciosa & Agnieszka Rusinowska, 2022. "A Dynamic Analysis of Criminal Networks," Documents de travail du Centre d'Economie de la Sorbonne 22006r, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Jun 2023.
    3. Grauberger, Waldemar & Kimms, Alf, 2016. "Revenue management under horizontal and vertical competition within airline alliances," Omega, Elsevier, vol. 59(PB), pages 228-237.

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    More about this item

    Keywords

    Targeted competition; Dynamic oligopoly; Differential games; Drug wars;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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