Hybrid Games in Strategy Analysis: Bargaining in the Shadow of Competition

n the analysis of value capture, it is central to understand what value each group of players can capture when leaving the negotiation table. Frequently, this will entail engaging in competition, i.e., non-negotiated, strategic interactions with the other players. For instance, if merger talks fail, parties may instead compete on the market. I propose to analyze such situations using a combination of cooperative and noncooperative games, which I refer to as hybrid games. Applications demonstrate how the nature and intensity of the non-negotiated interactions determine value capture, and that a correct delineation of negotiation groups is essential for a realistic analysis. I also show that biform hybrid games feature a type of value-based business strategy in which the stage-one actions literally change the game.