Theory of Competition, incentives and Risk

Abstract

It is now widely recognised that the nature of competition in market economies is far more complex (and more interesting) than the simple representation of price competition embodied in, say, the Arrow-Debreu model. Not only are there alternative objects of competition: firms compete not only about price but also about products and R & D. But, also, the structure of competition, the 'rules' which relate the pay-offs to each of the participants to the actions they undertake, may differ markedly from that envisioned in the standard model.2