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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.

Suggested Citation

  • Amir, Rabah & Garcia, Filomena & Knauff, Malgorzata, 2010. "Symmetry-breaking in two-player games via strategic substitutes and diagonal nonconcavity: A synthesis," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1968-1986, September.
  • Handle: RePEc:eee:jetheo:v:145:y:2010:i:5:p:1968-1986
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. Baomin Dong & Huasheng Song & Xiaolin Qian, 2016. "International R&D Collaboration and Strategic Trade Policy," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 250-260, February.
    3. Roy, Sunanda & Sabarwal, Tarun, 2012. "Characterizing stability properties in games with strategic substitutes," Games and Economic Behavior, Elsevier, vol. 75(1), pages 337-353.
    4. Fey, Mark, 2012. "Symmetric games with only asymmetric equilibria," Games and Economic Behavior, Elsevier, vol. 75(1), pages 424-427.
    5. David Goldbaum, 2016. "Conformity and Influence," Working Paper Series 35, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
    6. Federico Quartieri & Pier Luigi Sacco, 2016. "A note on the symmetry of all Nash equilibria in games with increasing best replies," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 39(1), pages 81-93, April.
    7. 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.
    8. Christian Ewerhart, 2017. "Ordinal potentials in smooth games," ECON - Working Papers 265, Department of Economics - University of Zurich.
    9. 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.
    10. repec:dau:papers:123456789/5841 is not listed on IDEAS
    11. repec:eee:inecon:v:109:y:2017:i:c:p:102-115 is not listed on IDEAS
    12. Andrew J. Monaco & Tarun Sabarwal, 2016. "Games with strategic complements and substitutes," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 62(1), pages 65-91, June.
    13. 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.
    14. Hefti, Andreas, 2017. "Equilibria in symmetric games: theory and applications," Theoretical Economics, Econometric Society, vol. 12(3), September.
    15. Olivier Chatain, 2014. "How do strategic factor markets respond to rivalry in the product market?," Strategic Management Journal, Wiley Blackwell, vol. 35(13), pages 1952-1971, December.
    16. Emilio Calvano & Mihele Polo, 2016. "Strategic Differentiation by Business Models: Free-to-Air and Pay-TV," CSEF Working Papers 438, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 07 Nov 2017.
    17. AJ Bostian & David Goldbaum, 2016. "Emergent Coordination among Competitors," Working Paper Series 36, Economics Discipline Group, UTS Business School, University of Technology, Sydney.

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