The concept of first mover advantage is widely used in gametheoretical Essay

The concept of original mover advantage is widely used in bet ontheoretical models and international trade theories. Discuss it in th - Essay ExampleA perfect example of first movers includes companies such as, Coca- smoke and eBay, who were the first companies to enter their respective market. Where Coca-cola was first community to produce cola and made their products available to the public in 1886, eBay was the first company to introduce the auction process online in 1995. Both these companies have been a recurrent power plant in their respective industries ever since they were founded. It has been witnessed very often that first movers are generally pursued by competitors who try to capitalize on the original companys success, brand value and recognition. They try and acquire the market that has already been penetrated by the first pitiable company (Poulsen, 2007). The competitors try and bring about certain(p) modifications and improvements in their product line and make th em available to the public in order to market their products, as being better than the products offered by the first moving company. However, by the time the competitors lay their foundation in the already penetrated market, the first mover has already accumulated huge market share, customer loyalty, satisfaction and expertise in this particular field of work, which is required to stay at the pinnacle (Markides and Sosa, 2013). ... One of the crucial characteristics as far predicting the second movers chemical reaction is concerned, is the second movers payoff function. First mover advantage is associated with pioneering products that benefit from advantages attained from a long-term market share. In addition to that, they excessively enjoy advantages in distribution of those products, the improved product-line, breadth, and quality (Chen and Pereira, 1999). First mover advantages are characterized by a pioneering firms ability to earn confirmatory economic profits (profits in ex cess of the cost of capital). First mover advantages transpire endogenously within multi-stage process (Lieberman and Montgomery, 2002). The multi stage process is depicted in excogitation 1. The first stage involves the generation of an asymmetry that enables a particular company to gain competitive advantage over the rival companies. This opportunity to make the first move is a result of the firms possession of some unique information sources or foresight or may be entirely out of luck. Once this asymmetry is established, a firm may be able to exploit its advantageous position by following variety of mechanisms. These mechanisms thereby enhance the durability and magnitude of the first mover profits. Figure 1 Endogenous generation of first mover advantages (Source Lieberman and Montgomery, 2002) Game speculation Game theory is the process of modelling the strategic interaction between two or more players in a situation containing set rules and outcomes (Heap and Varoufakis, 200 4). While used in a number of disciplines, game theory is most notably used as a tool within the study of economics. The economic application of game theory can be a valuable tool to aid the fundamental