Investigating the Role of Game Theory in the Evolution of Competition and Industrial Policies in industrial Economics

Abstract

This article investigates the relationship between competition policy, industrial policy, and the theoretical differences between them. The purpose of this study is to examine the contribution of game theory in the dual evolution of industrial economics since its emergence in the 1970s to the early 2020s. In the late 1970s, many game theory tools were incorporated into the industrial economic analysis; in the beginning, industrial economists made changes in game theory in order to adapt it to their own theories and then added this to their toolbox. In this regard, the present study is divided into three periods. The first period is the 1980s which is characterized by the existence of a unique competition policy without the presence of industrial policy.The second period, from the late 1980s to the late 1990s, is characterized by a combination of competition and industrial policy to meet and develop international competitions. The third period relates to 2000-2020, with the highlight of this period being the crisis of 2008 and 2009 and the restructuring of the declining industry to deal with economic and financial crisis. Since this period has not been over yet, a comprehensive description of emerging industrial and competition policy cannot be provided. However, some of the prominent trends can be anticipated, including the persistence, continuity, and implementation of industrial policy pertaining to the late 1970s. In this period, innovation-based policies will be strengthened and game-based industrial economy will continue to evolve.

Keywords

• game theory
• competition policies
• industrial policies
• industrial economics
• imperfect competion.