Essay on "One Player Games Versus Two"

Essay 3 pages (1221 words) Sources: 0

[EXCERPT] . . . .

Player Games vs. Two Player Games: Comparing Agribusiness Cooperatives with Investor-Owned Business Models presents a unique and fresh perspective on the reasons why agribusiness enterprises choose to utilize the cooperative business model as opposed to an investor-owned business model. The author's fundamental question posited is what makes the cooperative form unique and desirable to agribusiness and rural enterprises in absence of any widely recognized, accepted, or sufficiently utilized empirical evidence or scholarly study defining the rationale. In answering this query the author relies on a distinction between cooperatives and investor-owned entities centering on two dynamics: the dichotomy between profit maximization and social welfare, and the recognition of cooperative users and owners as filling traditionally contrary roles as one economic agent.

In developing an econometric model to test and explicate the differences in business forms, the author identifies the dual roles of the cooperative agent (owner and consumer) integrated into a single economic actor. Contrastingly the investor model is segmented into two disparate actors playing separate roles. In defining the model in this manner the actors assume the familiar design concomitant with a classical Nash equilibrium, one and two player games. In analyzing the actions inside the one and two player games the results highlight a defining differential characteristic between cooperatives and investor-owned enterprises, the economic actors inside the models do not pursue the same objectives, and as such the cooperative model is not an inefficient profit maximizing firm but rather a social welfare maximizing entity.

Comments about the Model and Results

The adoption of the economic agents bifurcated into one and two player games for the purposes of identifying expected payoffs in a Nash equilibrium, is a strength of the model and of the submission. Given the four equilibriums that follow from the use of a cardinally valued matrix within supply and demand analysis, the model predicts using aggregated consumer and producer surpluses the resulting payoffs under the Nash equilibrium.

The model develops four cardinally valued matrix options, the first represented in Figure one which abstractly displays the aggregated payoffs in terms of their respective inequalities. Figure one provides some confusion for the reader in terms of its choice of profit maximization in the two player game however; the author significantly assists the reader in Figure two by assigning numeric values to the payoffs which provides a concreteness previously unavailable. Figures three and four further develop the payoffs under the one and two player models and develop several key conclusions. First that the one player game as defined by investor owned firms will choose profit maximization (an unexpected conclusion) however, its importance is in its opposed diametric in which two player games produce economic agents in a cooperative pursuing aggregate surpluses coinciding with social welfare. Second, the distinction in the resulting equilibriums is the defining difference between the cooperative and investor model.

The economic model is well thought out, but at times the discussion glosses over important distinctions which might provide greater perspicuity in the analysis. As an example a more detailed setup of the use of the cardinal variable and the neoclassical inequality assumptions might allow for the reader to better grasp the models conclusions in figures three and four. The author is at their best when they succinctly lay out the expected and actual results of the aggregate outputs under the Nash equilibrium, and their extrapolated meaning for the business models. Citing page 12 the author clearly states the differences of profit maximization in two player games, and the social welfare maximization found in one player games.

Assessment of the Exposition

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