Oligopolistic Rivalries

Ricardo G Barcelona and Franz Heukamp

Chapter 10 in Dynamic Decisions:Energy PIVOT, Adaptive Moves, Winning BOUnCE, 2022, pp 511-582 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Oligopoly differs from pure competition in substantive ways. As oligopolists, each rival firm asserts its influence on prices, costs, or volumes. As their actions interact, their market shares as well as their costs vary, thereby altering the value of their firms. To adaptively respond, managers would need to “look forward, reason backwards” and glance sideways when aiming to profit from changing markets. Avinash K Dixit and Barry J Nalebuff (1993) succinctly describe what the managerial purpose is. They understood strategic thinking as an “art of outdoing an adversary, knowing that the adversary is trying to do the same to you.” By understanding the dynamic decision contexts, managers could identify adaptive pathways and the levers of value to inform their next strategic moves.

Keywords: Energy; Energy Investments; Option Games; Real Options; Climate Finance; Sustainable Investment; Dynamic Decisions; Decision Uncertainties; Renewable Energy; Fossil Fuel; Carbon Tax; Energy Transition; Behavioural Economics; Political Economy; Financial Economics; Strategy and Competition (search for similar items in EconPapers)
JEL-codes: C58 G3 G30 O13 P48 Q43 Q5 (search for similar items in EconPapers)
Date: 2022
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