RMIT Vietnam – Price Theory Course, Individual Assignment
1. Time zone: All time chosen by me is for GMT+7, as I am from Vietnam. Please adjust to the experts’ time zone.
You are to write a 2,000-word essay on the market analysis topic. Your essay must solve all of the problems below:
- US-China trade war
Explain how the US-China trade war can be seen as the Game of Chicken (For simplicity, just consider the non-repeated version of this game like the one in the course’s slides) and predict/discuss the results of this trade war using game theory. In this question, you are expected to:
- Providing the basic game settings:The type of game, number of players, possible strategies (actions) for each player. The information about the trade war can be found here (Links to an external site.).
- Constructing hypothetical payoffs: You need to give some numbers to represent the payoffs for each strategy of each player in the game. To do this, you need to identify the type of payoffs (profits, utility, amount of money…). Then, you assign an appropriate number for each strategy of the player. For example, if the US plays strategy A and China plays strategy B then the US’s payoff is … and China’s payoff is … After that, construct the payoff matrix for the game.
- Finding the theoretical Nash’s Equilibrium: Based on the payoff matrix that you have constructed, find the theoretical Nash Equilibrium of that game.
- Discuss/predict the outcome of the REAL trade war: According to your hypothetical game, what is the probable outcome of the US-China trade war? Do you think that this outcome will occur in reality? In this part, you have to collect and analyse the data about the trade war, compare what you observe with the assumptions of the game and then discuss whether the real trade war will have the same outcome as the game of chicken.
- Imperfect competition
Choose one of the following industry: Oil and Gas (Links to an external site.), Power generation (Links to an external site.), Wireless Telecommunication (Links to an external site.), read the report (you may need to use other references as well) and answer the following questions:
- Discuss whether your chosen market can be considered as an oligopoly market. You may want to focus your discussion on key characteristics of an oligopoly market.
- Identify and analyse any possible types of competition that are likely to occur in your industry (Quantity competition/Price competition/Product differentiation). Your analysis must be supported by concrete evidence/data/facts.
- Link the competition mentioned above with the game theory models discussed in the course (Cournot competition/Bertrand competition/Hotelling model). You have to state the theoretical results of the chosen model and discuss whether these results are likely to happen in your chosen industry.
- Analyse any threats of new entrants into the chosen industry. What strategies can incumbent firms implement to limit those threats?
- Competition of television game shows.
Television game shows producers can compete with each other by locating their programs along the preferences line of the audience. Assume that the audience’s preference has two dimensions: content and broadcast timing.
- Use the Hotelling model to explain why game shows tend to have similar contents and broadcast in similar hours.
Hint: You have to provide the basic settings of this game and find the Nash equilibrium of this game.
- Collect data about game shows contents and broadcast timing in a country. Does the collected data support the theoretical results?
- Can that equilibrium be stable from time to time? Does the data support that stability?
Note: PLEASE READ THIS INSTRUCTION CAREFULLY:
- In this assignment, you are expected to give a great effort to do research on the related Make sure your sources are relevant and reliable. You can also introduce a model/point of knowledge that had never been taught in the module to get a higher score. Try to give accurate knowledge, thorough analysis, and convincing arguments with a limited word count.
- Cohesion and coherence are so important; any point of knowledge must be accurate, fully explained and linked to other ideas. Graders may give a big minus if you present a lot of new ideas without explanation or provide irrelevant facts/figures that do not match your analysis.
- Your word count is up to 2,000 words (graph labels and formulas will not be counted). Two points will be deducted for every 100 words that exceed the word limit. Graders are required to follow this guideline Hence, every sentence in the essay should be considered carefully. Do not use any unnecessary word. Present your word count on the cover page.
- Please check your word usage/grammar, avoid unclear English and spelling Strictly follow the requirements on Cover page/Editing guideline/Reference