Exercise | June 2013 (Revised July 2013)

Competition Simulator Exercise

by Eric J. Van den Steen

Abstract

In the Competition Simulator Exercise, students explore through trial and error some important economic foundations of competitive strategy and managerial economics. In particular, the simulator lets students explore horizontal differentiation with and without price setting, strategic complements and substitutes and their implications for commitment and for first-mover advantage, the effect of the number of competitors on the competitiveness of a market, capacity limitations and judo economics, natural monopoly and the effect of market size, technology choice as entry deterrence, endogenous economies of scale, and capacity limitation in commodity markets.

Keywords: Competition; Economics; Game Theory; Competitive Strategy; Marketing Strategy;

Citation:

Van den Steen, Eric J. "Competition Simulator Exercise." Harvard Business School Exercise 713-804, June 2013. (Revised July 2013.)