Competitive Firms’ Optimal Decisions on Entering Accessory Market

Abstract

The smartphone is now a widespread trend that causes phone accessory markets to rise. The high penetration rate of smartphones has led to a saturated market. The accessory market not only has tremendous business opportunities but also high potential. In practice, the decision of whether to join the accessory market differentiates by each smartphone firm. This study analyzed and discussed the main product firms’ optimal decisions of whether to enter the accessory market by using game theory as a construct model. Considering the different competition situations, the decision of whether the main product firm invests in the accessory market affected the market demand, pricing, and profit of all firms. Furthermore, we analyzed the differences in the external environment to determine what the best decision for the main product firm was. The results of the research show that complementary effects do not always have a positive influence on firms’ willingness to join the accessory market. When weak main product firms have different market forces in the main product market, the dominant main product firms are not necessarily more willing to join the accessory market than weak firms.