This thesis consists of two parts, dealing with equilibrium selection in noncooperative games and strategic interaction in international markets, respectively. The main issue raised in each part is different from the other, but a common method based on noncooperative game theory is used throughout the thesis.
In the first part of the thesis, presented in Chapters 2 and 3, the general question is what mechanism can induce players to expect the same equilibrium in coordination games. In Chapter 2, tacit coordination is analyzed in noisy games. The model is employed to generate predictions about the outcome in a symmetric coordination game. Chapter 3 introduces a model with structured and costly pre-play communication. The model is used to generate hypotheses on how the outcome of the game is related to the cost of communication and capacity for transmitting information.
The second part of the thesis, presented in Chapters 4, 5 and 6, studies different issues related to strategic interaction in international markets. Chapter 4 deals with credibility in multi-market competition. The analysis focuses on the incumbent's possibilities to exploit first-mover advantages as it competes with potential entrants in several markets. Chapter 5 presents a model of arbitrage in a multi-market oligopoly. More specifically, the model is used to generate hypotheses on how the market structure is related to market-specific barriers and scale economies in the transportation technology. The last essay, presented in Chapter 6, analyzes price discrimination in a simple two-country model. The aim of the analysis is to evaluate the effects of costly arbitrage and free-riding in an international context.
