Red Bull and Monster Energy in a Competitive Game: Modelling Market Behaviour through Game Theory

This paper applies game theory to analyse the strategic interaction between Red Bull and Monster Energy, the two dominant firms in the global energy drink market. The main objective is to examine how their pricing, marketing, and expansion decisions can be modelled through key game-theoretic concepts. The central hypothesis posits that both companies tend to select aggressive investment strategies, leading to a stable equilibrium in which neither firm benefits from unilateral deviation. The study uses publicly available revenue and profit data to construct payoff matrices and simulate strategic outcomes under alternative competitive scenarios. A simplified two-strategy model, i.e., aggressive expansion versus conservative growth, is applied to evaluate firm behaviour and profit trajectories. The findings indicate that both companies achieve higher growth under mutually aggressive strategies, confirming the existence of a dominant-strategy equilibrium that aligns with a Nash equilibrium. The paper concludes that long-term competition between the two firms is characterised by high interdependence, strategic mirroring, and limited incentives for cooperative positioning.