Chapter 7: Competition
“Win As Much As You Can”
A Game of Price Competition
Managing competition is one of the most important elements of pricing strategy. This game is to
illustrate the dynamics of price competition.
Instructions
The game consists of a series of “bids.” In each “bid,” each team makes a simple pricing
decision: to charge a high price or a low price. The resulting profit or loss depends on the
Your competitor’s price is
High
Low
You earn
You earn
Your
High
$5
–$10
company’s
You earn
You earn
Rules
You cannot legally collude with the other team. That would be an antitrust violation that could
cost you triple damages if you lose the post-game antitrust lottery. You can, however, make
public statements that describe your intentions. You are under no obligation, however, to act
consistently with those statements.