Modeling pricing policy of economic agents in the framework of intersectoral competition

Abstract

The paper examines modeling price balance in the context of competition between industries. Despite an extensive study of this topic, the question of the influence of production dependence on price dynamics remains open. The authors propose a methodology for modeling competition within the intersectoral balance and evaluate the impact of production interdependence on industries. The hypothesis of this study is that the dynamics of indicators in the presence of production dependence between industries will differ from the dynamics of indicators of independent industries. The findings show that a certain level of competition brings more profit for all competing industries than with its complete absence, which contradicts modern provisions of economic theory. It was shown that with a further increase in the level of competition, the marginality of competing industries decreases. Other industries that provide products for competing industries are increasingly benefiting from increased competition through lower costs. Total output increases more slowly in a situation of independent industries, because in the case of dependence, more output is required for the functioning of industries. The increase in the number of competitors changes the speed of the reaction of industries to changes in the market situation. The optimal level of competition in order to maximize the profits of competing industries is maintained only in the case of interdependence of industries. The results of the study can be useful for the formation of strategies for the development of industries and decision-making at the level of industry and government policy.