Nobody downloaded yet

Corporate Finance Project - Essay Example

Comments (0) Cite this document
Regarding the corporate investment viewpoint, the game theory has a great value for the specific industry that is specially characterized as an example of oligopoly market. So, before starting our discussion, we need have a specific idea of oligopoly competition…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.7% of users find it useful
Corporate Finance Project
Read TextPreview

Extract of sample "Corporate Finance Project"

Download file to see previous pages Because of their fewness, oligopolists have considerable control over their prices, but each must consider the possible reaction of rivals to its own pricing, output & advertising decision.
Oligopoly pricing behavior has the characteristics of certain game of strategy, such as poker, chess, & bridge. The best way to play such game depends on the way one's opponent plays. Players (& oligopolists) must pattern their actions according to the actions & expected reaction of rivals. The study of how people behave in strategic situations is called game theory. In other words, game theory analyzes the way that two or more players choose strategies that jointly affect each-other. This theory that sounds frivolous in its terminology is fought with significance & was largely developed by john Von Neumann (1903 - 1957), a Hungarian-born mathematical genius. Economists, union-management disputes, country's trade policies, international environmental agreements, reputations, & a host of other situations have used game theory. It offers insights for policies, welfare, & everyday life as well. Thus, similarly, in our motto in the market competition in the product market for business investment purpose, this theory has a major implication. To realize so, we will need to move for the further analysis.
Here, the vertical rust arrows show uptown's price cuts; the horizontal rust arrows show Starship's matching each price cut. ...
Why Because the only price compatible with both stratifies is a price of 0, 90% of 0 is 0. Finally, it dawns on the two firms- when one firm cuts its price, the other firm will match the price cut. Only if the firms are shortsighted will they think that they can undercut each-other for long. So, they will think that- What will my rival do if I cut my price or raise my price
Basic Explanation:
In a duopoly market, it is assumed that each firm has the same cost & demand structure, each can choose whether to charge its normal or lower price below marginal cost & try to drive its rival into bankruptcy & then capture the entire market. The novel element is the firm's profits will depend on its rival's strategy as well as on its own growth. A useful tool for representing the interaction between two firms is a two way payoff table or matrix which shows the strategic & payoffs of a game between two players. In this table, a firm can choose between the strategies listed in its rows or columns like below-
In this figure, each firm decides whether to charge its high price or to start a price war by choosing a lower price. Cell A, at the upper left, shows the outcome when both firm choose the high price; D is the outcome when both choose to conduct a price war & B & C result when one firm has a high price & one a war price. The numbers insight the cells show the payoffs of the two firms, the profits earned by each firm for each of the four outcomes. The rust number in the lower left shows the payoff to the player on the left (Starship), the upper right shows the payoff of the player at the top (Uptown) as the firms are identical, the payoffs are mirror images.
Alternative ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Corporate Finance Project Essay Example | Topics and Well Written Essays - 4000 words”, n.d.)
Corporate Finance Project Essay Example | Topics and Well Written Essays - 4000 words. Retrieved from
(Corporate Finance Project Essay Example | Topics and Well Written Essays - 4000 Words)
Corporate Finance Project Essay Example | Topics and Well Written Essays - 4000 Words.
“Corporate Finance Project Essay Example | Topics and Well Written Essays - 4000 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Corporate Finance Project

Corporate finance

...? Corporate Finance Introduction The significance of natural gas is growing everyday as energy needs in industrial, transportation, and technological sectors are on the rise. Although other renewable energies like solar power and wind power have been in use, individuals and business organizations still depend more on natural gas due to its easy availability and increased efficiency. In addition, features like easy availability, broader applicability, high safety, reduced noise pollution, and renewability of natural gas improve the scope of natural gas industry. Clean Energy Fuels Corp. (CLNE) is the North America’s largest provider of transportation natural gas and the organization has currently spread...
8 Pages(2000 words)Research Paper

Corporate finance

...TOPIC: CORPORATE FINANCE (a) Introduction: Our are the most treasured assets we have, a such we treat them with utmost care and maximum attention in given to them for the purpose of transparency, progress and the most of which is –satisfaction of our clients. This is most serious because they are our future and we owe them satisfaction with perfection. As you are aware we use fundamental analysis and valuation methods to select equities for you as a guide for portfolio investments. It is in this light that our bank has deem it fit to present to you a fundamental analysis and the valuation of one of the FSTE 100 Companies, which is the “British Airways”. This analysis will include; A fundamental analysis...
17 Pages(4250 words)Essay

Corporate finance

...Corporate Finance Issues Capital Structure and Dividend Decisions “It is ironic that the ic theory of corporate finance concludes that capital structure and dividend decisions do not affect the value of a listed company”. Critically evaluate this theory and discuss competing theories that may shed light on the gearing and dividend decisions of listed companies. (Weight 30%) Gearing and Dividend Policies of Vodafone plc Using publicly available information, critically evaluate the gearing and dividend policy of one FTSE 100 company. (Weight 30%) Corporate Governance “If managers and directors of listed companies choose to ignore the interests of...
18 Pages(4500 words)Essay

Corporate finance

...Corporate Finance Introduction United Metal is considering an alternative proposal of buying components from Amalgamated Components. These componentsare at present being manufactured in house by United Metals. The proposal assumes a saving of $96000 during a period of eight years, which is remaining useful life of machinery purchased by United Metals a year ago the purpose of manufacturing of such components. An effort has been made in this write up to evaluate both the in-house manufacturing and buying proposals in order to arrive at proper recommendations to be made to United Metals. a) Critical evaluation of arguments of purchasing and production managers Purchasing Manger’s arguments 1. The argument of the purchasing manger... Finance...
5 Pages(1250 words)Essay


...Business Finance Article - How to Evaluate Your Business & Improve Your Bottom Line During Recession by Tony Massaro In the current economic condition, with the high recession that is being faced globally, Massaro has taken an initiative to provide businesses with a solution and some recommendations to be able to cope up with the recession and yet be successful. This article talks about the some extremely essential questions which need to be answered by business to ensure that the business is moving in the right direction. In the current scenario, it is a necessity for businesses to evaluate themselves and make necessary changes to be able to survive in the markets. Massaro has also provided clear reasoning to the...
2 Pages(500 words)Essay

Corporate finance

...of irrational behavior by the economic agents which resulted into the greater impact on the economy in the form of current financial crisis.(Folsom,2009) One of the arguments, put forward by Jeremy J Siegel, do however, indicates that the efficient market hypothesis may not be entirely responsible for the current financial crisis. This analysis is based on the studies conducted on the prices of real estate for the past 61 years up to 2006 indicating that the overall variability in the prices of the real estate properties were only less than 3% which basically allowed credit rating agencies as well as finance managers to lower down the risk premium to be obtained on the subprime borrowers. Further, based on this...
8 Pages(2000 words)Essay

Corporate Finance

...Impact of the World’s Flatness on Corporate Finance of the of the Impact of the World’s Flatness on Corporate Finance Introduction I’m sure we’ve all heard of the popular refrain, ‘Money makes the world go round.’ In fact, the 21st century has been distinguished from all of previous history by the lack of borders, open and worldwide employment opportunities, the transfer of technology and education at a breakneck speed. The world is truly becoming more of a global village every day. We cannot be separated from what is happening all across the world, as recent events unfold right across our TV screens 24/7 courtesy of satellite TV and the plethora of channels that work...
1 Pages(250 words)Essay

Corporate finance

... disclosure literature, Journal of Accounting and Economics 31 (2001) 405–440. Honohan, P., 1995. The impact of financial and fiscal policies on saving, The Economic and Social Research Institute, Working paper No. 59, World Bank research project on saving, [online] Available at: [Accessed 9 March 2013]. Kothari, S. P., 2001. Journal of Accounting and Economics, 31 (2001) pp. 105–231 White, S. E., 2012. The rising global interest in sustainability and corporate social responsibility reporting, Thomson Reuters, 5 October 2012, [online] Available at: corporate-social-responsibility-reporting/> [Accessed 9 March 2013]. Yahoo! Finance, 2013. FTSE 100, [online] Available at: [Accessed 9 March 2013]. 7. Appendices Annexure – I Source: Yahoo! Finance, 2013.... managed companies...
11 Pages(2750 words)Assignment

Corporate finance

... Corporate Finance In the first scenario, Mark needs to be overhauled without incorporating a brand new control system. The revenue generated is $1.4 million after the plane is operational and this is after one year. Therefore, no revenue will be earned for the first year. Thereafter the revenue earned will be increased with inflation of 2.5%. Revenue for 2nd year = Revenue for 3rd year= Consecutively, the revenue for the other years is calculated similarly for 12 years as shown in Table 2. The total operating cost is $1,181,000. Similarly, the operating cost for the first year is 0 since the plane is not operational. These costs also increase with inflation. Operational cost for the 2nd year = Operational cost for 3rd year... Corporate...
3 Pages(750 words)Essay

Corporate finance

...Corporate finance Contents Contents 2 Introduction 3 Main body 3 Efficiency of financial market 3 Efficient-market hypothesis 3 Random Walk Hypothesis 4 Possibilities of future bubbles and predictability 5 Conclusion 7 References 8 8 Introduction The concept of efficient market hypothesis came in 1960’s when Eugene Fama introduced this theory. According to this hypothesis, beating the market is not possible as prices are already included and talks about all relevant information. The theory is not at all free from controversies. The hypothesis also tells that buying and selling of securities is all about of chances and there is no scope of skills. Recently the global economy has gone through a very...
6 Pages(1500 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Corporate Finance Project for FREE!

Contact Us