Game Theory in Business Decision-Making: A Strategic Approach to Competitive Market Dynamics

In the complex and competitive landscape of modern business, strategic decision-making plays a pivotal role in determining success. This paper explores the application of game theory in business decision-making, focusing on its utility in competitive scenarios such as pricing strategies and market share battles. In this paper, the Bertrand Competition Model, Cournot Competition Model and further extended model are introduced and put into test in the American Express delivery market which is led by FedEx, UPS and USPS. The main finding is that the real market is not ideal competitive, price adjustment delay and brand premium exist. Under the Bertrand model, the price tends to be equal to marginal cost which is not realistic in the real market.