Example

The Windsurfing/Kitesurfing Game as an Illustration of Strategic Interdependence

The Wanda and Kit pricing model illustrates the strategic behavior of firms that produce differentiated products in a market with a small number of competitors. This model contrasts with simpler economic models where a firm's demand curve is assumed to be fixed. In this strategic environment, a firm's demand is not fixed; for example, Wanda's demand curve shifts in response to the price set by Kit. This demonstrates strategic interdependence, where each firm recognizes that its own pricing decisions will influence its rivals' choices.

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Updated 2025-11-08

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