One of the great accomplishments of IO has been the rigorous
application of game theory to the analysis of market
competition. In fact, the game theoretic nature of IO is one of
the main reasons why IO became so popular within economics--and
with other related disciplines, such as strategy and marketing.
This chapter, which concludes the introductory part of the book,
presents the main concepts of game theory that are necessary to
understand the rest of the text. In fact, the chapter goes a
little beyond what is strictly required to follow the rest of
the text. As indicated in footnote c, Sections 4.2 and 4.3 can
be skipped in a first reading. Not that sequential games and
repeated games are unimportant: in fact, Chapters 12 and 15
introduce various sequential games; and Chapter 8 is essentially
based on the notion of repeated games. However, Chapters 8, 12
and 15 are written in a way that allows for its comprehension
without the prior reading of Sections 4.2 and 4.3. There are two
possible ``strategies'' reg