关键词: 竞争性企业；产品线延伸；囚徒困境；博弈模型

Abstract: Designing vertically differentiated series of products and extending product line is one of the business strategies often adopted by enterprises. Game theory is used to explore the effectiveness of the vertical extension strategy of competitive enterprise product line with extension cost, in order to provide a certain scientific basis for the selection of vertical extension strategy of enterprise product line. In the competitive situation, both enterprises have the opportunity to extend their product lines and seize market share. Two demand functions of enterprises are constructed by the theory of consumer utility, and the equilibrium solution and profit are obtained. It is found that in Nash game, when the extension cost is high, the competitive enterprises will give up the extension of product line; when the extension cost is moderate, the enterprises that carry out the extension of product line will gain more profits, while the competitors who do not carry out the extension of product line will suffer losses; when the extension cost is low, although the best choice of enterprises is to extend their product line, the two enterprises will fall into“prisoner’s dilemma”. Instead of making more profit, the product line extension reduced the profit. In addition, it is found that the core conclusion of this paper is still valid when two enterprises play Stackelberg game. But when enterprise 1 is dominant, enterprise 1 is more willing to extend its product line vertically, while enterprise 2 is more reluctant to extend its product line. In addition, the comparison also shows that when two enterprises play Stackelberg game, the possibility of two enterprises falling into “prisoner’s dilemma” increases.

Key words: competitive enterprises; product line extension; prisoner’s dilemma; game model