Drugs, Guns, and Targeted Competition

16 Pages Posted: 13 Aug 2009 Last revised: 29 Feb 2012

See all articles by Andrei Dubovik

Andrei Dubovik

CPB Netherlands Bureau of Economic Policy Analysis

Alexei Parakhonyak

University of Oxford - Department of Economics

Date Written: October 7, 2011

Abstract

We consider a dynamic competition game among three players, where each player can vary the extent of his competition on a per-rival basis. We call such competition targeted. We show that if the players are myopic, the weaker players eventually lose the game to their strongest rival. If instead the players are sufficiently far-sighted, then all three players converge in their power and stay in the game. We develop our model in application to drug wars, but the approach of targeted competition can be applied to competition between firms or political parties, or to warfare.

Keywords: targeted competition, dynamic oligopoly, differential games, drug wars

JEL Classification: C73, D43

Suggested Citation

Dubovik, Andrei and Parakhonyak, Alexei, Drugs, Guns, and Targeted Competition (October 7, 2011). Available at SSRN: https://ssrn.com/abstract=1447787 or http://dx.doi.org/10.2139/ssrn.1447787

Andrei Dubovik (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

HOME PAGE: http://www.yellowsite.ru/en

Alexei Parakhonyak

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

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