Balance of Power

Research output: Working paperDiscussion paperOther research output

365 Downloads (Pure)


This paper argues that the efficiency distribution of players in a game determines how aggressively these players interact.We formalize the idea of balance of power: players fight very inefficient players but play softly versus equally (or more) efficient players.This theory of conduct predicts that entry by new firms leads to a less aggressive outcome if it creates a balance of power. A balance of power is created if more players get technologies that are close to the most efficient technology.Using a related argument, we show that an increase in entry costs can lead to more aggressive outcomes.
Original languageEnglish
Place of PublicationTilburg
Number of pages34
Publication statusPublished - 2004

Publication series

NameCentER Discussion Paper


  • pricing games
  • Folk theorem
  • refinement of predicted outcomes
  • supergames
  • contestable market


Dive into the research topics of 'Balance of Power'. Together they form a unique fingerprint.

Cite this