StrategicLab
Learning path · 4 labs

Economic Competition

How do firms’ choices shape a market?

These are applications of strategic games. They have their own learning route so you can compare economic assumptions and market outcomes. Familiarity with Nash equilibrium and backward induction is useful; the Strategic Games route introduces both.

Economic competition is an application of strategic games. This separate route organizes the market models for easier comparison. Explore the underlying strategic ideas →

A suggested learning path

Follow the sequence, or jump directly to the question that interests you. Each lab opens in Guided Learning; switch to Sandbox at any time to experiment freely.

  1. Step 1

    Cournot Duopoly

    Begin with firms choosing quantities at the same time.

    Learning outcome: Find each firm's best quantity and the equilibrium where the reaction curves cross.

    Level
    Intermediate
    Time
    About 20 min
    Concepts
    Reaction curve · Cournot equilibrium · Best response
    A blue factory and a red factory sending conveyor belts of yellow cubes into one shared golden market tray.
  2. Step 2

    Bertrand Competition

    Switch the decision from quantity to price and compare the incentives.

    Learning outcome: Explain why identical firms undercut prices down to cost, and how differentiation keeps prices higher.

    Level
    Intermediate
    Time
    About 20 min
    Concepts
    Undercutting · Bertrand equilibrium · Product differentiation
    Two scenes of a blue and a red seller pricing identical mugs at $6 and $7, then differentiated mugs at $7 and $8, with a yellow buyer choosing between them.
  3. Step 3

    Stackelberg Competition

    Let one firm commit first and work backward through the follower's response.

    Learning outcome: Solve leader–follower quantity competition by backward induction and measure the first-mover advantage.

    Level
    Intermediate
    Time
    About 20 min
    Concepts
    Commitment · Backward induction · First-mover advantage
    A blue leader at factory number one thinking about the quantity a red follower at factory number two will produce in response.
  4. Step 4

    Entry Deterrence

    Add entry costs and ask when an incumbent can discourage entry.

    Learning outcome: Find the incumbent output at which entry stops paying and judge whether that threat is credible.

    Level
    Intermediate
    Time
    About 20 min
    Concepts
    Entry cost · Deterrence threshold · Commitment
    A blue incumbent factory filling a golden market tray with yellow cubes while a red entrant weighs whether to build a factory, with a stack of coins beside them.
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