Question

Provide an example of a situation where moving first in a sequential move game is a disadvantage rather than an advantage. Why is this the case?

Answer 1

The first mover in the sequential game might have an advantage as well as a disadvantage. The Disadvantage occurs happen when the first mover has to make a larger expenditure to launch the product or enter the market and creating awareness about the product.

The other firm enters the market, and it does not have to make the expenditure to create the market and it takes the benefits already established markets.

For example, the Uber made a huge expenditure to establish the market for car sharing or acting as car aggregator, But when the maket developed, the many other firms entered the market to reap the benefits of expenditure which was made by the Uber.