Application of Game Theory: Apple Company's Oligopoly Market

This essay examines the application of game theory to the Apple Company within the context of an oligopolistic market structure. It explores how Apple's decisions, particularly in relation to new product launches and market competition, can be understood through game theory principles. The essay discusses the hierarchical organizational structure of Apple, its recent performance, and the company's position within the smartphone and branded computing machine markets. Key concepts such as Nash equilibrium and the prisoner's dilemma are explained, demonstrating how these theoretical frameworks shed light on Apple's strategic interactions with competitors like Samsung and HTC. The analysis highlights the challenges of maintaining cooperation in an oligopoly and the incentives for firms to compete aggressively to increase market share. The essay references relevant academic sources to support its arguments, providing a comprehensive overview of game theory's relevance to Apple's business strategy.

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Application of Game Theory
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Application of Game Theory
Name The Industry
Firms in an oligopoly market are independent. Their decisions regarding how much to
produce not only are affected by theirs but also that of other firms in the market. The theory
propositions framework of thinking on how firms may act in the context of this independence.
Explicitly, game theory can be used to consummate a situation. For instance, in which each
performer, when deciding the development of the act, must also reflect how others might answer
to that action (De Stefani, 2015). This essay incorporates Apple Company, the industry that will
be applied with the game theory.
Game theory explains why oligopolies have distress in maintaining conclusive
arrangement to engender monopoly profits (Marden & Shamma, 2015). While organizations
would be better off together if they collaborate, each organization has a strong motivation to
cheat and weaken their competitor to raise their market share. Since the enticement to detect is
sturdy, organizations may not even engage in a collusive arrangement if they lack ways to punish
defectors effectively.
Structure of the industry
Apple’s firm structure is effective in supporting corporate performance in the mobile
phone industry. The structure ensures innovation and effectiveness are critical to its success. As
such, it uses a hierarchical organizational structure (De Stefani, 2015). In a business structure,
this is a traditional fester. The divisional elements implicate grouping with the company, such as
iOS and macOS. While the hierarchy is preserved, the weak functional matrix entails inter-
divisional collaboration.
Performance In The Past Three Years

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Apple Company is one example of a first transnational company. It presents large
engineering appliances throughout the year. The United Kingdom-based company has introduced
its merchandise to the entire globe. Recently, Apple Company had a declaration of the progress
of a “super tablet” computing appliance (De Stefani, 2015). Market research shows that the
customers’ demand was very high for this new engineering point. Over the previous three years,
Apple company has experienced limitless success owing to its innovation and ability to produce
regularly. Through the uninterrupted invention, Apple Inc. has made sensible stairs in the
enlargement of the information engineering universe (He,2015). This has forced its few rivals to
clamor and compete in the market evenly. Apple Company can be based on different market
construction, like oligopoly and monopolistic competition. The oligopolistic market structure is
upheld by the Apple company in the competition of smartphone trade names pronouncements.
Moreover, the company is known for its monopolistic rivalry in the branded computing pieces of
machinery.
Game Theory And Decisions Made
In regards to game theory, Apple company new invention brands are a monopoly. The
other branded computing machine corporations, like Samsung, HTC, and Dell, are strong rivals
that share their computers and mobile computing machine market internationally (Marden &
Shamma, 2015). The gross income produced by such a competitor company is adequate for
Apple Company. It ensures they are top producers over their entrants.
Nash Equilibrium
The prisoner’s predicament is a precise kind of game theory that demonstrates why
cooperation may be hard to maintain for oligopolies even when it is jointly advantageous. In the
game, two members of a criminal gang are detained and confined. The prisoners are separated

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and left to plan their options. If both prisoners admit, each will serve a two-year prison tenure. If
one admits, but one denies the crime, the one who admitted will walk free, while the one that
rejected the offense would get a three-year sentence (Heusel et al.,2017). If both deny the
wrongdoing, they will both serve a one-year verdict. Exposing the partner by confessing is the
dominant approach. It is a better strategy for each player, nonetheless, of how they play. This is
known as the Nash equilibrium (Heusel et al.,2017). The outcome of the game is that both
prisoners follow individual logic and betray when they would have jointly gotten a better result if
they had liaised. This is how Apple company has engaged in the game theory with its
competitors.
Decision Tree

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The idea from the condition “Prisoners’ Dilemma,” which sheds light on why people
frequently fail to work well together. Game theory demonstrations that people who are nice and
truthful have a strategic benefit, as they can “change the game” to escape the Prisoners’ Dilemma
and make everyone better off including themselves.

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References
De Stefani, S. (2015). Why did Apple change its strategy? The case of the iPhone: adoption of a
new technology and trade-in programs in the context of innovation (Bachelor’s thesis,
Università Ca’Foscari Venezia).
He, Z. (2015). Rivalry, market structure, and innovation: The case of mobile banking. Review of
Industrial Organization, 47(2), 219-242.
Heusel, M., Ramsauer, H., Unterthiner, T., Nessler, B., & Hochreiter, S. (2017). Gans trained by
a two time-scale update rule converge to a local nash equilibrium. In Advances in neural
information processing systems (pp. 6626-6637).
Marden, J. R., & Shamma, J. S. (2015). Game theory and distributed control. In Handbook of
game theory with economic applications (Vol. 4, pp. 861-899). Elsevier.