This solution uses the example of coke and pepsi to illustrate game theory it explains why game theory is used to analyze oligopolistic markets, and uses a payoff matrix to show why coke and pepsi engage in non-price competition but not price competition. A game theory is a pricing policy and it helps a firm to enhance profit there are high barriers to enter this market coca cola and pepsi have signed a cartel contract. Coke or pepsi little doubt that the most spirited and intense competition in the beverage world is between coca-cola and pepsi co, the two main players in the carbonated soft drink (csd) production market. I am the author of the joy of game theory: an introduction to strategic thinkingi have also written books about mathematical puzzles, paradoxes, and related topics available on amazon. Pepsi & coke: related to game theory in may, 1886, coca cola was introduced by john pemberton a pharmacist from atlanta, georgia john pemberton started brewing his coca cola formula in a three legged brass kettle in his backyard.
Case coke and pepsi learn to compete in india essay coke and pepsi learn to compete in india case 1 the political environment in india has proven to be critical to company performance for both pepsico and coca- cola india. Domestically and abroad (see exhibit 3) c cola industry leaders, coca-cola and pepsi, should practice game theory to better understand their competitive market • cola wars with the well established brands of coca-cola and pepsi. Managerial economics term paper application of game theory in a duopoly: case of coke cola and pepsi co by - abeer nandrajog (13010) aditya tanwar (13020. Pepsi & coke: related to game theory 09 pepsi & coke 08 fall in may, 1886, coca cola was introduced by john pemberton a pharmacist from atlanta, georgia john pemberton started brewing his coca cola formula in a three legged brass kettle in his backyard.
Managerial economics term paper application of game theory in a duopoly: case of coke cola and pepsi co by - abeer nandrajog (13010) aditya tanwar (13020) acknowledgement we would like to thank our managerial economics teacher, ms shalini prakash for her guidance and help. Coke and pepsi learn to compete in india #1: the biggest issued face by both pepsi and coke was india's strong feeling for the need to protect themselves from western companies, economic policies and unclear laws which meant that both companies had to follow laws that where in place to make it hard. Before pepsi created their diet drink they had to use game theory strategies to see if it would be beneficial assuming pepsi and coke are the only two firms in the market, if pepsi chose to introduce a diet drink, coke would then choose either split the market evenly, or initial a price war each earning 50% of the market. coca cola vs pepsi we often have a coke or a pepsi when we have lunch, hang out with friends, or even just simply when watching television some people choose one of them simply by their taste some people choose one of them simply by their taste.
Course blog for info 2040/cs 2850/econ 2040/soc 2090 there are two kinds of people in this world: the pepsi lovers and coke followers once a person decides on a preferred brand, it is surely a rare thing for each brand-lover to switch their preference out of the blue. This solution shows how to use game theory and nash equilibria to predict whether coke and pepsi will continue their advertising war or reduce their advertising budgets. Coke is likely to stay at $1 99 and enjoy the additional sale, as some people who were originally buying pepsi will be switching to coke figure [ 1 ] if pepsi lowers its price to $1 49 to gain an advantage over coke and increase it sales to 1500 six-packs, it may not succeed. Game theory situations economists and mathematicians call games psychologists call social situations while game theory has applications to games such as poker and chess, it is the social situations that are the core of modern research in game theory.
Coke and pepsi effectively further reduced the supplier of aluminum can makers by negotiating on behalf of their bottlers, thereby reducing the number of major contracts available to two with more than two companies vying for these contracts, coke and pepsi were able to negotiate extremely favorable agreements. The actions of coke and pepsi detailed in the given article are an application of game theory, since both businesses have incomplete information regarding the other company's intended course of action. View game_theory_pepsi_and_coke_example from fin & act 435 at north south university managerial economics term paper application of game theory in a duopoly: case of coke cola and pepsi co by abeer.
Pepsi and coke had a vast understanding on game theory and demonstrated it with their sequential and simultaneous move games •game theory in business connecticut the authors research, teaching, and consulting focus on game theory and business strategy, and their book on the subject will be published by currency. Coke and pepsi game theory 09 pepsi & coke 08 fall in may, 1886, coca cola was introduced by john pemberton a pharmacist from atlanta, georgia john pemberton started brewing his coca cola formula in a three legged brass kettle in his backyard. More essay examples on pepsi rubric the main difference between coke and pepsi is their respective history and how their efforts especially with advertising came to define their brands. I need an essay, one page long based on the cola wars continue: coke and pepsi in 2010 from harvard business school publishing (i have the case in case you need it), use game theory approach/analysis to explain the competitive behavior of coke and pepsi making specific references to action taken by each firm and the different battlefields.
More essay examples on coca-cola rubric pemberton's original coca-cola recipe called for coca leaves and kola nuts after mixing his concoction with sparkling mineral water, pemberton began to market the beverage as a fountain drink, and as an alternative to beer and ginger ale. Econ 3551/ l kahane oligopolies by kenya spring 09 pepsi & coke 08 fall in may, 1886, coca cola was introduced by john pemberton a pharmacist from atlanta, georgia.