How do you model and predict competition and cooperation outcomes?

2 Market structure

Market structure is a term that describes the characteristics and features of a market, such as the number and size of sellers and buyers, the degree of product differentiation, the barriers to entry and exit, and the availability of information. Market structure can help you model and predict the outcomes of competition and cooperation by determining the market power, pricing, output, profits, and efficiency of firms and industries, as well as the implications for consumer surplus, social welfare, and public policy. Market structure can vary from perfect competition, where many small firms sell identical products and face no barriers to entry or exit, to monopoly, where one large firm sells a unique product and faces significant barriers to entry or exit, and other intermediate forms such as monopolistic competition, oligopoly, and duopoly.

3 Network effects

Network effects are a phenomenon where the value or utility of a product or service depends on the number or size of users or customers of that product or service. Network effects can help you model and predict the outcomes of competition and cooperation by influencing the demand, supply, pricing, adoption, and innovation of products and services, as well as the formation, growth, and stability of networks and platforms. Network effects can be positive, where the value or utility increases with the number or size of users or customers, or negative, where the value or utility decreases with the number or size of users or customers. Network effects can also be direct, where the value or utility depends on the number or size of users or customers of the same product or service, or indirect, where the value or utility depends on the number or size of users or customers of complementary or related products or services.

4 Contract theory

Contract theory is a branch of economics that studies how agents design and enforce contracts or agreements in situations where there is incomplete or asymmetric information, uncertainty, or moral hazard. A contract is a set of rules or terms that specify the rights, obligations, and incentives of the parties involved in a transaction or relationship. Contract theory can help you model and predict the outcomes of competition and cooperation by analyzing the optimal design, implementation, and enforcement of contracts, as well as the trade-offs, constraints, and challenges that arise from information problems, incentive problems, and enforcement problems.

5 Behavioral economics

Behavioral economics is a branch of economics that incorporates insights from psychology, sociology, and neuroscience to explain how human behavior deviates from the standard assumptions of rationality, self-interest, and consistency. Behavioral economics can help you model and predict the outcomes of competition and cooperation by accounting for the cognitive biases, heuristics, emotions, social norms, and cultural factors that affect the decision-making and behavior of agents, as well as the potential interventions or nudges that can improve the outcomes and welfare of agents. Behavioral economics can also help you understand the role of fairness, trust, reciprocity, altruism, and cooperation in economic interactions, as well as the factors that promote or hinder these behaviors.

6 Experimental economics

Experimental economics is a branch of economics that uses controlled laboratory or field experiments to test, verify, or falsify economic theories, hypotheses, or phenomena. Experimental economics can help you model and predict the outcomes of competition and cooperation by providing empirical evidence, data, and feedback on the validity, applicability, and robustness of economic models and predictions, as well as the effects of various parameters, variables, and interventions on the behavior and outcomes of agents. Experimental economics can also help you explore new or alternative models and predictions, as well as generate new or novel insights and questions for further research.