The Study On Differentiation Management Strategy Of Oligopoly Firms Based On Game Theory

The factors that decide the degree of oligopoly firms' differentiation is game analysised in order to cause their differentiation decision more scientific.Firstly,by introduction cost difference to the classic Hotelling model It concludes that the oligopoly firm who has cost advantage can cause the competitors carry out the maximum differentiation;or even can cause the competitors exit the market when their cost difference attain a certain degree.Secondly,a products selection-price competition game model of duopoly on the condition of asymmetric transportation costs is established to discuss the relevance of products differentiation strategy and transportation costs.Thirdly,the differentiation game model of consumer's unevenly distribution is established to discuss the affection of consumer's distribution to oligopoly firms' differentiation.It can conclud that the companies always trying to occupy the positions where consumers focus on if market has vacancies,and rational entrants should carry out maximum product differentiation strategy if they not have the cost advantage.But if the entrants have enough cost advantage,they should locate at the positions where consumers focus on and cause the competitors withdraw.Fourthly,a quality - price competition model is established.After analyzing it found that Oligopoly firms should regard high quality and high level as a long-term goal,but in the short term,oligopoly firms should determine their products quality according to the actual situation of themselves and their competitors.Blindly quality competition without taking quality cost into account is pyrrhic.Fifthly,branding and advertising game model are established.After analyzing it is revealed that branding and advertising contribute much to oligopoly firms' product differentiation and can mitigate the intensity of price competition.Finally,the results of this paper is supported by analysing the competition of domestic microwave oven industry and the market behavior of glanze and meidi-two microwave oven manufacturers.