Mixed strategy game theory and the Indian cotton industry

Rohan Kunwar, Krish Vora and Debi Prasad Bal

International Journal of Services, Economics and Management, 2026, vol. 17, issue 2, 204-220

Abstract: Two cotton mills in Coimbatore, Tamil Nadu, India, are analysed in this paper to determine their optimal strategy using mixed-strategy dynamic game theory. We used monthly data (2019-2022) on cotton prices. Our research demonstrates a cyclical character to the disparity in cotton prices indicated by two traders in 2019. In 2020 and 2021, however, the cyclical character is not seen because of extreme price volatility caused by the COVID-19 outbreak and consequent lockdowns; cycles are restored in 2022. The cyclical nature of the price difference plot is explained by applying mixed-strategy dynamic game theory to show the two traders modify prices. In 2019, (N_X, N_Y) equals (0.68, 0.77), the Nash equilibrium. So, in a mixed Nash Equilibrium, both merchants will benefit from selling cotton.

Keywords: cotton mills; mixed strategy; Nash equilibrium; and payoffs; India. (search for similar items in EconPapers)
Date: 2026
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