Modelling the Interaction Between Incumbents and New Entrants with a Game Theory Approach: A Case Study of Public Transportation

Abstract The transformative influence of new entrants on industries and heightened competition underscores their significance. Mature companies, threatened by their entry, deploy multiple incentives to forestall market penetration. Conversely, consumers embrace fresh participants, creating a dichotomy in reactions. This has spawned escalated conflicts between mature firms and newcomers, rooted in the latter's market entry. This study navigates this landscape by delving into the strategies, preferences, and priorities of these actors, seeking stable equilibrium and reconciliation points for these conflicts. Employing thematic analysis, it distills options, feasible scenarios, and relative preferences of each stakeholder. These insights undergo scrutiny via the GMCR + decision support model. Among 21 conceivable scenarios, the study unveils three equilibria and a semi-stable state, suggesting mature companies recalibrate their stance to explore synergies with new entrants. This research offers a panoramic perspective on the intricate interactions between mature companies and new entrants, transcending the narrow confines of entry barriers.