Initial Price Strategies of Polish Micro and Small Enterprises: An Application of Game Theory for Industrial Organization of the SME Sector

Abstract

The sector of micro, small and medium size enterprises is important for any economy. It is important also for Poland. Analyzing the industrial organization of this sector it was confirmed that the owners and managers of such companies are applying strategies, which are rational from their point of view, but not from the perspective of real market conditions. It is argued therefore that the game theory is for them a solution in enhancing competences and performance of their organizations. Based on randomized sample of Polish micro and small companies the paper aimed to find out if the managers apply the game theory rationales when choosing price strategy when enter the market. It was confirmed that they do not and that they don't play Nash equilibrium in the strategic interaction when it comes to the price level. There was applied maxmin strategy, which maximises the worst - case scenario from the game. Thus there is a real chance that if entrepreneurs would analyze the situation with respect of game theory, their strategies would be more accurate and provide better outcomes.