9058009884

C-HAPTfc* TM

37

86230

prl cfi, t.he larger 1 a 11.a Market. share, aa 1t. 1 s shnwn -for exaMple- In t.he f o 1 1 o w 1 n g prnapect.:

p(j)/p*:    1.00    0.95    0.90    0.85    0.80    .....

1norea ae In

market, ahare: 0.00    0.0 5    0.11    0.18    0.30    .....

Suppoae, f ur t.hermore , t.hat. .mich a prlce reaiilt.a fr om t.he appllcat. 1on of a f 1 x e d coeffldent m>1 t.o t.he unit. cost., a o t. h a t.

P(J) - » <i(j) - » t W(j) / v(j) ]    [6]

Any firm (or a uh-ay a tern) can at.art. t.he coapet.1t.1ve gamę, elther 1mprov1ng 1 ta prodnot.1v1ty or aucceedlng 1n ohanglng t.he rulaa whlch det.ermlne t.he wagea. ‘ Suppoae, for example, t.hat a f 1 r ra 1a ahle t.o decreaae 11.a prlcea by 0.0 5 at. each 'ronnd¹ of t.he gamę, a Im Ing at lowe ring 1 t.a relat. 1 ve prlce down t.o t.he leve] of 0.80 wlt.hln t.he fourt.h ronnd, ao t.hat. 11. coli Id Increaae 1 t.a aarket. ahare hy 30%, aa 1 t. la ahown In t.he proapect. above.

Tt. 1a ohv1ona t.hat. t.he gambie can not. aucceed 1f t.he ot.her playera adopt., In react. ion , a almllar at.rat.egy; In fact., In ao far aa each of t.he playera w1 1 1 aucceed In cntt.lng t.helr prlcea, t.he average level of prlce will decreaae, and t.hna tend to reat.ore t.he prev1ona levela of relat. 1ve prlcea. Any ga 1 n In t.he market. aharea la t.hna bound t.o be t.ra na 1 t.ory. Nevert.he 1 eaa , 1f each ronnd of t.he gamę la long enongh, and 1f t.he playera are not. conadoua of t.helr reclprocal 1 n t.erdependence, theae t.ranalt.ory galna will be anfflclent. to make t.he gamę 1 a a t..

We have, t.hna far, a ba a 1 rally zero-aurn gamę, whlch, once put. 1nt.o mot.lon, t.enda t.o laat. Th1a reault., however, at.r1ct.ly dependa on t.he fact. t.hat we did not. conalder t.he ayat.emlc effecta of t.he changea affect. 1ng, becauae of t.he gamę, wagea, product.1v1t.1ea, and posalbly t.he overall levela of demand and p r o d ii c 1.1 v e napad ty.

Once we t.ake t.hem 1nt.o eona 1 der at. 1 on , t.he gamę la 1 łkały t.o manlfeat. 11. aelf aa helng a negat. 1ve-aua one. Th1a    la

baalcally dne t.o t.wo dlfferent. canaea , t.he flrat. one deallng wlt.h aggregat.e demand, t.he aecond deallng wlt.h employment. levela and labour atandarda. Qhv1onaly, when we talk of a negat.1ve ^iim gamę we ref er to t.he whole ayat.em and not. neceasarlTy t.o each of t.he 1nvolved . part.iea;    t.hat la,

referrlng to t.he F.uropean arena, we aay t.hat t.he whole of t.he F.F.C ' ayat.em’ 1a bound t.o be worae off, whlle not. denying t.hat. aome of t.he RRC count.rlea could f1nd hlmaelf belng batter off. ¹ Ret.t.er off', however, wlt.h reapect. t.o what.? Wlt.h reapect. t.o ot.her count.rlea cert.alnly yea; wlt.h reapect. t.o a complet.ely alt.ernat.1ve gamę 1a Inat.ead rat.her doubt.ful.*

The 'gamę trap¹ at.aya, Indeed, In t.hla b1aa of per apect. 1 vea. The flrat. poaalble blaa 1a' g1ven by t.he fact.