7. Strategic Substitutes and Complements
This session has been considered the most difficult material in the
course by students in past years.
- Packet: Besanko, David, David Dranove and Mark Shanley,
``Strategic Commitment and Competition,'' pp. 319-348 of The
Economics of Strategy, New York: John Wiley and Sons, 1996.
Some strategies reinforce each other; other strategies hamper each
If one person escalates, the other must follow his example.
Topics That Might be Discussed in Class
- Soft vs. Tough strategies
- Strategic Substitutes and Complements
- The Fudenberg-Tirole typology of strategies
Strategic Substitutes and Complements, Direct Effect and Strategic
Tough vs. Soft Firms,
For Next Time: Signalling
- Packet: McMillan, John, ``Information and Bargaining
Breakdown,'' pp. 65-75 of Games, Strategies, and
Managers, Oxford: Oxford University Press, 1992.
- "The 2001 Sveriges Riksbank (Bank of Sweden) Prize in Economic
Honor of Alfred Nobel," (Akerlof, Spence, Stiglitz), Nobel Foundation
release, October 10, 2001, http:
- "Stanford Business School's Spence Wins Nobel Prize in Economics,
Stanford Business School press release, October 9, 2001, http:
Return to the Thinking Strategically Home
Page at http://pacioli.bus.indiana.edu/erasmuse/g570/g570.htm.
Send comments to Prof.
. Last updated: March 27, 2002.