Decision Making for Production and Pricing a New Product Using Game Theory (Case Study Automobile Produced Domestically)



Selecting a set of features and price for new product is one of the most important and difficult decisions for any firm. For its implementation firms require information by demand of consumers about product features,the cost of providing these features and reaction of existing competitors to new product entry. In this research, with the help of game theory, the various positions of new product entry in the automobile market has been studied and the position and price that makes the highest profit for manufacturers has been determined. Results of research show that with entering a new product,price reaction of competitors are not significant and entering new product has the greatest effect on their market share.
JEL Classification: G12, E23, D4, C7