Exploration on the Application of Game Theory in Business Competition Strategies

Abstract

This study delves into the application of game theory in business competition strategies, constructing game models to analyze the competition and cooperation among enterprises, encompassing market entry and exit, price competition, and advertising promotion strategies. Game theory aids enterprises in gaining a deeper understanding of their competitors’ strategies and formulating rational strategies. In the context of e-commerce price wars, an analysis of the “618” competition between Tmall and JD.com through a duopoly game model reveals that while price wars stimulate demand in the short term, they ultimately undermine profits in the long run. Consequently, enterprises must explore win-win mechanisms, incorporating differentiated competition, technological innovation, and cost control to maintain their leading market position.