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 nine simulator exercises let 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. It can be used to introduce these concepts without necessarily relying on a lot of math or as an intuitive complement to a more mathematical exposition

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.)