Applied Analysis Of Game Theory In Price Competition

The phenomenon of the price competition is appearing in every walk of our life,which is more frequent these years in China. On the one hand,the price competition could make the resource collocated over again. But we should notice there something was happened. It always results in a vicious competition with the upgrade of the price competition. A period of intensive competition among businesses in which each competitor tries to cut retail prices below those of the others.Therefore the price competition is one side"the double-edged sword", While it exert the positive influence on the economical development,we cannot neglect the negative influence of the price competition. Hence, the price competition should be limited, When the price competition achieves certain degree , Persistent and comprehensive price war may bring the long-term negative influence to the industry under other factors. Particularly,while the enterprise falls into so-called"the duplicated price wars"in situation,It causes the industry to fall into the condition of competition excessively. Generally speaking, the excessive price competition can bring the following some influences. Firstly,enterprise's profit level appears to the drop. Secondly, as far as the consumer aspect is concerned, it can arose the negative influence to the consumer psychology and the behavior.How to result these problems? All of these need us to explore and research continuously. Game Theory is a theory that is most widely and successfully applied in economic research in recent years. This thesis discussed the reason of price competition and result of price competition,the advantage and disadvantage to enterprise development by modeling the price competition. At last, the thesis drawed a conclusion: the quantities of enterprises,the otherness of production. the superiority of cost,which were important to the price competition. So,the author suggested some viewpoint: the enterprise could adopt such strategy like the ally,innovation , reduce the cost and choose some invest strategy. The author also hope these can do something helpful to our company.