Research Note and Communication: Multiple Point Competition

  • Wernerfelt B
  • Karnani A
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Abstract

Although firms often compete against each other simultaneously in various markets, little conceptual or theoretical literature exists concerning this multiple point competition. To develop a conceptual framework for analyzing and understanding circumstances surrounding multiple point competition, several examples are explored. These cases include: 1. the domestic airline industry in the US, 2. the global tire industry (focusing on Michelin and Goodyear), 3. the coffee industry, and 4. competition between BIC and Gillette in the disposable ball-point pen market. In responding to an attack, an organization can defend itself, counterattack, or declare total war. While defending can lead to a limited war equilibrium, counterattacking can bring about a mutual foothold equilibrium or market sharing. Various situations are analyzed from the viewpoints of both the responder and the attacker. Providing that the responder has reasonable alternatives, a mutual foothold equilibrium may represent an effective course of action. If big advantages can be attained from moving first, a mutual foothold, rather than total peace, will provide a stable equilibrium.

Author-supplied keywords

  • Strategies
  • competitive analysis techniques
  • multi point competition

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Authors

  • Birger Wernerfelt

  • Aneel Karnani

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