The importance of threats and promi

The importance of threats and promises
In may situations, an oligopolits will make a threat or promise that it will act in a certain way. As long as the threat or promise is credible (i.e. its competitors believe it), the firm can gain and it will influence its rivals’ behaviour.
Take the simple situation where a large oil company, such as Ampol, states that it will match the price charged by any competitor within a given radius. Assume that competitors believe this ‘price promise’ but also believe that Ampol will not try to undercut their price. In the simple situation where there is only one other filling station in the area, wahat price should it charge? Clearly it should charge the price which would maximise its profits, assuming that Ampol will charge the same price. In the absence of other filling stations in the area, this is likely to be a relatively high price.
Now assume that there are several filling stations in the area. What should the company do now? Its best bet is probably to charge the same price as Ampol and hope that no other company charges a lower price and forces Ampol to cut its price. Assuming that Ampol’s threat is credible, other companies are likely to reason in a similar way.
The importance of timing
Most decisions by oligopolists are made by one firm at atime rather than simultaneously by all firms. Sometimes a firm will take the initiative. At other times it will respond to decisions taken by other firms.
Take the case of a new generation of large passenger aircraft which can fly further without refuelling. Assume that there is a market for a 500-seater version of this type of aircraft and a 400-seater version, but that the market for each sized aircraft is not big enough for the two manufacturers, Boeing and Airbus, to share it profitably. Let us also assume that the 400-seater market would give an annual profit of $50 million to a single menufacturer and the 500-seater would give an annual profit of $30 million, but that if both manufacturers produced the same version, they would each make an annual loss of $10 million.
Assume that Boeing announces that it is building a 400-seater plane. What should Airbus do? The choice is illustrated in Figure 7.5. This diagram is called a decision tree and shows the sequence of events. The small square at the left of the diagram is Boeing’s decision point (point A). If it had decided to build the 500-seater plane, we would move up the top branch. Airbus would now have to make a decision (point B1). If it too buil the 500-seater plane, we would move to outcome 1: a loss of $10 million for both manufacturers. Clearly, with Boeing building a 500-seater plane, Airbus would choose the 400-seater plane: we would move to outcome 2, with Boeing making a profit of $30 million and Airbus a profit of $50 million. Airbus would be very pleased!
Boeing’s best strategy at Point A, however, would be to build the 400-seater plane. We would then move to Airbus’s decision point B2. In this case, it is in Airbus’s interests to build the 500-seater plane. Its profit would be only $30 million (outcome 3), but this is better than a $10 million loss if it too built the 400-seater plane (outcome 4). With Boeing deciding first, the Nash equilibrium will thus be outcome 3.
There is clearly a first-mover advantage here. Once Boeing has decided to build the more profitable version of the plane, Airbus is forced to build the less profitable one. Naturally, Airbus would like to build the more profitable one and be the first mover. Which company succeeds in going first depends on how advanced they are in their research and development and in their production capacity.
More complex decision trees. The aircraft example is the simplest version of a decision tree, with just two companies and each one making only one key decision. In many business situations, much more complex trees could be constructed. The ‘game’ would be more like chess, with many moves and several options on each move. If there were more than two companies, the decision tree would be more complex still.

Hasil (Bahasa Indonesia) 1:

Pentingnya ancaman dan janji-janjiDalam mungkin situasi, oligopolits akan membuat sebuah ancaman atau janji yang akan bertindak dengan cara tertentu. Selama sebagai ancaman atau janji kredibel (yaitu pesaingnya percaya itu), perusahaan dapat memperoleh dan itu akan mempengaruhi perilaku para pesaingnya. Mengambil situasi sederhana mana perusahaan minyak besar, seperti Ampol, menyatakan bahwa itu akan cocok dengan harga yang dikenakan oleh pesaing manapun dalam radius tertentu. Asumsikan bahwa pesaing percaya 'janji harga' ini tetapi juga percaya bahwa Ampol tidak akan mencoba untuk memotong harga mereka. Dalam situasi sederhana yang mana terdapat hanya satu stasiun pengisian lain di daerah, harga wahat harus mengisi? Jelas itu harus mengisi harga yang akan memaksimalkan keuntungan, dengan asumsi bahwa Ampol akan mengenakan biaya harga yang sama. Dalam ketiadaan lain stasiun pengisian di daerah, hal ini mungkin menjadi harga yang relatif tinggi. Sekarang berasumsi bahwa ada beberapa stasiun pengisian di daerah. Perusahaan bagaimana sekarang? Anda bertaruh terbaik adalah mungkin untuk biaya harga yang sama seperti Ampol dan berharap bahwa tidak ada perusahaan lain biaya harga yang lebih rendah dan memaksa Ampol untuk memotong harga. Dengan asumsi bahwa Ampol's ancaman kredibel, perusahaan lain mungkin untuk alasan dengan cara yang sama. Pentingnya waktuKebanyakan keputusan oleh preciously Oligopoli dibuat oleh satu perusahaan di atime bukan secara bersamaan oleh semua perusahaan. Kadang-kadang sebuah perusahaan akan mengambil inisiatif. Di lain waktu mereka akan merespon terhadap keputusan yang diambil oleh perusahaan lain. Ambil kasus sebuah generasi baru dari pesawat penumpang besar yang bisa terbang lebih lanjut tanpa pengisian. Asumsikan bahwa ada pasar untuk 500-seater versi dari jenis pesawat dan 400-seater versi, tapi bahwa pasar untuk masing-masing berukuran pesawat tidak cukup besar untuk dua produsen, Boeing dan Airbus, untuk berbagi menguntungkan. Mari kita juga berasumsi bahwa pasar 400-seater akan memberikan keuntungan tahunan sebesar $50 juta untuk menufacturer tunggal dan 500-seater akan memberikan keuntungan tahunan sebesar $30 juta, tetapi bahwa jika kedua produsen menghasilkan versi yang sama, mereka akan masing-masing membuat kerugian tahunan sebesar $10 juta. Berasumsi bahwa Boeing mengumumkan bahwa ini adalah membangun pesawat 400-seater. Apa yang harus lakukan Airbus? Pilihan diilustrasikan pada gambar 7,5. Diagram ini disebut sebuah pohon keputusan dan menunjukkan urutan peristiwa. Alun-alun kecil di sebelah kiri diagram adalah Boeing keputusan titik (point A). Jika ia telah memutuskan untuk membangun pesawat kursi 500, kita akan bergerak ke arah atas. Airbus akan sekarang harus membuat keputusan (titik B1). Jika itu terlalu paket pesawat kursi 500, kami akan pindah ke hasil 1: kerugian sebesar $10 juta untuk kedua produsen. Jelas, dengan bangunan 500-seater pesawat Boeing, Airbus akan memilih bidang 400-seater: kami akan pindah ke hasil 2, dengan Boeing membuat keuntungan $30 juta dan Airbus keuntungan sebesar $50 juta. Airbus akan sangat senang! Boeing’s best strategy at Point A, however, would be to build the 400-seater plane. We would then move to Airbus’s decision point B2. In this case, it is in Airbus’s interests to build the 500-seater plane. Its profit would be only $30 million (outcome 3), but this is better than a $10 million loss if it too built the 400-seater plane (outcome 4). With Boeing deciding first, the Nash equilibrium will thus be outcome 3. There is clearly a first-mover advantage here. Once Boeing has decided to build the more profitable version of the plane, Airbus is forced to build the less profitable one. Naturally, Airbus would like to build the more profitable one and be the first mover. Which company succeeds in going first depends on how advanced they are in their research and development and in their production capacity.More complex decision trees. The aircraft example is the simplest version of a decision tree, with just two companies and each one making only one key decision. In many business situations, much more complex trees could be constructed. The ‘game’ would be more like chess, with many moves and several options on each move. If there were more than two companies, the decision tree would be more complex still.