Economics Game Theory Questions
The role of game theory in industrial organization is to analyze and understand the strategic interactions between firms in an industry. It helps in predicting and explaining the behavior of firms, such as pricing decisions, market entry, product differentiation, and advertising strategies. Game theory provides a framework to model and analyze the strategic choices made by firms, taking into account the actions and reactions of their competitors. This analysis helps in understanding market outcomes, market power, and the efficiency of markets in different industrial settings.