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Competition dynamics in Nigerian aviation industry: a game theoretic approach

Author

Listed:
  • Olatunji Abdul Shobande

    (University of Aberdeen)

  • Mobolaji Daniel Akinbomi

    (University of Lagos)

Abstract

Background This paper develops a game theoretic model that analyses the dynamics of competition among the leading domestic aviation firms in the Nigerian aviation industry. It probes the abilities of the prisoner dilemma to describe the subjective behaviour of the firms, which provide a yardstick for assessing the optimal competitive strategies available to the firm to survive the business environment. Results The solution of the game provides different optimal competitive strategies for the firms. While findings show that Aero Contractors placed more weight on flight pricing to survive in the industry, Arik Air needed to retain non-pricing competitive strategy to remain the leading domestic aviation firm in Nigeria. Conclusion Based on our findings, we conclude that if both firms stick to the optimal strategy, they would both share the market.

Suggested Citation

  • Olatunji Abdul Shobande & Mobolaji Daniel Akinbomi, 2020. "Competition dynamics in Nigerian aviation industry: a game theoretic approach," Future Business Journal, Springer, vol. 6(1), pages 1-8, December.
    • Handle: RePEc:spr:futbus:v:6:y:2020:i:1:d:10.1186_s43093-020-00019-8
    DOI: 10.1186/s43093-020-00019-8
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    More about this item

    Keywords

    Firm strategy; Game theory; Duality; Aviation industry;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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