Market Entry Decisions In An Experimental Game Setting

Overview: Combining perspectives from population ecology and strategy research, this paper examines the effects of legitimation, heterogeneity among players, and uncertain capacity on market entry decisions in an experimental game setting. It find that heterogeneity and uncertain capacity did little to impair the high levels of coordination between aggregate entry decisions and market capacity. However, introducing legitimation made it difficult for entrants to coordinate their entry decisions at or near threshold values. It also find substantial individual differences in entry strategies - a necessary condition to achieve equilibrium - and no movement away form equilibrium predictions in the direction of Pareto optimal outcomes. Market entry decisions are among the most important and complex strategic considerations that firm’s face. Whether viewed from the perspective of incumbents – firms already in the market - or entrants – firms new to the market – entry decisions present opportunities for substantial rewards as well as threats to a firm’s continued prosperity and survival. It also focuses on a method known as aggregate entry decisions, to assess how well entry decisions track capacity, it examine two measures - the correlation coefficient between c and m, and the number of violations of monotonicity. Monotonicity, implied by both the pure and mixed strategy equilibrium solutions, simply requires that m increase in c for entry decision subject.

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Format: HTML | Date: Oct 2003 | Pages: 1