Endogenous heterogeneity in strategic models: symmetry-breaking via strategic substitutes and nonconcavities

Rabah AMIR, Filomena Garcia () and Malgorzata Knauff

No 2006008, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper is an attempt to develop a uniÞed approach to endogenous heterogeneity by constructing general class of two-player symmetric games that always possess only asymmetric pure-strategy Nash equilibria. These classes of games are characterized in some abstract sense by two general properties: payoff non-concavities and some form of strategic substitutability. We provide a detailed discussion of the relationship of this work with MatsuyamaÕs symmetry breaking framework and with business strategy literature. Our framework generalizes a number of models dealing with two-stage games, with long term investment decisions in the Þrst stage and product market competition in the second stage. We present the main examples that motivate this study to illustrate the generality of our approach.

Keywords: inter-Þrm heterogeneity; submodular games; business strategy; innovation strategies. (search for similar items in EconPapers)
JEL-codes: C72 C62 L11 (search for similar items in EconPapers)
Date: 2006-02-01
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Related works:
Working Paper: Endogenous Heterogeneity in Strategic Models: Symmetry-breaking via Strategic Substitutes and Nonconcavities (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:cor:louvco:2006008

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