Author: Kareem Hage-Ali

Shopping for groceries is an extremely common practice that we go through multiple times a month. It is important that we find local grocery stores that are cheap to make our trips inexpensive. But, due to the low amount of competition in the industry, these retailers take advantage of the consumers by pricing items approximately the same in order to control the market and increase their profit. There are a lot of factors that goes into deciding how to price items to gain the maximum profit possible but Ezeala-Harrison and Baffoe-Bonnie both show that given two retail stores that belong in a regional oligopoly (few competition), if they both operated as rivals, the best choice for both of the stores would be to not co-operate with each other.

Consider the following payoff matrix:

We will define “cooperate” as a store not playing any aggressive moves and “non-cooperate” as a store that is making aggressive decisions such as significantly altering prices of products that also belong to rivals. Considering the figure above, we can look at the power of each term to determine the payoff that the specific firm will receive (i.e power of 0 indicates breaking even while greater than 0 implies profit and less than 0 implies losing money). By observing the above figure, we can see that the Nash equilibrium of the decisions of these two firms is if they both do not co operate, implying a competitive environment where both stores are making aggressive actions. In the published paper, Ezeala-Harrison and Baffoe-Bonnie compute by probability, the best choice of both the firms which also concludes that both firms can establish greater benefits by not cooperating.

By our results of the payoff matrix above, we would expect that both firms that belong in an oligopoly would compete against each other aggressively, as it would give better results. In real life, this isn’t the case. There can be multiple reasons why the conclusions from the payoff matrix isn’t accurate (i.e various factors that go into choosing pricing for products) but the most likely cases are either 1) firms price match each other or 2) collusion between these firms. In an oligopoly market, the small amount of competition are given the opportunity to work together (sometimes illegally) in order to benefit all competition. This can involve both firms raising prices of the exact same products, leaving consumers no choice but to buy unreasonably priced groceries.

In conclusion, oligopoly markets involving the retail grocery industry exhibits behaviour that is not natural based on a simple Prisoners Dilemma model and indicates to us that price matching may occur between the firms in these markets or collusion with the stores exists. Either way, the local consumers unfortunately have to suffer consequences of buying overpriced products if they happen to live in regions dominated by few competition.

Reference

Ezeala-Harrison, F., & Baffoe-Bonnie, J. (2016, January 30). Market Concentration in the Grocery Retail Industry: Application of the Basic Prisoners’ Dilemma Model. Retrieved from http://www.scienpress.com/Upload/AMAE/Vol%206_1_3.pdf.

For the past decade, the growth of social media platforms have been enormous. These platforms are used to connect and create relationships with friends and people that we interact with on a daily basis. Even though these social networks are meant for people to add their friends, it turns out that these platforms are very susceptible to attackers that are looking to send spam for their personal gain. But, how do these attackers get the opportunity to include themselves in a network of friends that they do not belong in? Using Facebook as a common social network, have you ever received a friend request from a random person? This is exactly the way these attackers get themselves involved within a network. All it takes is one friend of a large network of friends to accept that request from the attacker that will now allow the attacker a path to all other members of the large network. If you have any personal information such as your phone number or email on your profile, these will now all be compromised and make you vulnerable to spam attacks. Because of the undirected nature of these friend relationships, mindlessly accepting requests on these social networks will leave you exposed to such attacks.

If we think of this in terms of what we know about networks, this is an extremely common occurrence. Once a user forms a friend relationship with an attacker, this can be seen as a bridge edge from a group of attackers to a group of normal friends. Another aspect of social networks is the concept of mutual friends. This initial relationship between one attacker and one real user can quickly snowball into further relationships between other attackers and other real users. Therefore, we now no longer have a single bridge node connecting these two groups of graphs, but several local bridges that strengthen their relationships that will lead to more attacks.

In conclusion, being apart of a social network can leave us vulnerable from attackers looking to send spam messages. The obvious solution to this is to avoid including personal information in our social media profiles. Other than this, we must be careful with who we decide to share our profiles with, as we could be creating a bridge between a network of attackers and our group of friends.

Reference

Shrivastava, N., Majumder, A., & Rastogi, R. (2008, April 12). Mining (Social) Network Graphs to Detect Random Link Attacks. Retrieved from https://ieeexplore.ieee.org/abstract/document/4497457.