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Stability Properties in a Dynamic Stackelberg Oligopoly Model

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  • JOHN A. RICKARD

Abstract

The paper considers the oligopoly problem which arises when sellers adopt the ‘Stackelberg strategy’. Using this strategy, each seller maximizes his profit function on the assumption that each of his rivals adopts the usual Cournot assumption. The effects of an incomplete adjustment process and variable marginal cost are considered. A necessary and sufficient condition for the stability of the solution w obtained. For constant marginal cost the solution is only stable for three or fewer sellers. In general, increasing marginal cost has a stabilizing effect on the solution but the stability is suprisingly independent of the speed of adjustment.

Suggested Citation

  • John A. Rickard, 1980. "Stability Properties in a Dynamic Stackelberg Oligopoly Model," The Economic Record, The Economic Society of Australia, vol. 56(154), pages 253-256, September.
    • Handle: RePEc:bla:ecorec:v:56:y:1980:i:154:p:253-256
    DOI: 10.1111/j.1475-4932.1980.tb01675.x
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    References listed on IDEAS

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    1. Osborne, D K, 1971. "The Duopoly Game: Output Variations," American Economic Review, American Economic Association, vol. 61(4), pages 538-560, September.
    2. R. D. Theocharis, 1960. "On the Stability of the Cournot Solution on the Oligopoly Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 27(2), pages 133-134.
    3. Franklin M. Fisher, 1961. "The Stability of the Cournot Oligopoly Solution: The Effects of Speeds of Adjustment and Increasing Marginal Costs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 28(2), pages 125-135.
    4. F. H. Hahn, 1962. "The Stability of the Cournot Oligopoly Solution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 29(4), pages 329-331.
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    Cited by:

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    2. Antonio Doria, Francisco, 2011. "J.B. Rosser Jr. , Handbook of Research on Complexity, Edward Elgar, Cheltenham, UK--Northampton, MA, USA (2009) 436 + viii pp., index, ISBN 978 1 84542 089 5 (cased)," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 196-204, April.

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