Illustrates the usefulness of game theory for strategic management through theoretical and empirical analysis of price competition in the presence of production backlogs. Game-theoretic analysis predicts a different relationship between relative prices and backlog levels than does analysis that ignores the sorts of interactive considerations emphasized by game theory. Empirical analysis based on data for the US market for large turbine generators between 1951 and 1963 corroborates the game-theoretic prediction.

Keywords:

• Studies
• Game theory
• Strategic management
• Pricing policies
• Turbines
• Generators
• Production management

Request article reprint by e-mail.