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A linear generalization of Stackelberg’s model

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  • Thierry Lafay

Abstract

We study an extension of Stackelberg's model in which many firms can produce at many different times. Demand is affine while cost is linear. In this setting, we investigate whether Stackelberg's results in a two-firm game are robust when the number of firms increases. We show that: firms may not need to anticipate further entries, leaders might earn less than in the simultaneous game and, whatever its cost and its time of entry, the firm's entry always improves welfare.
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Suggested Citation

  • Thierry Lafay, 2010. "A linear generalization of Stackelberg’s model," Theory and Decision, Springer, vol. 69(2), pages 317-326, August.
    • Handle: RePEc:kap:theord:v:69:y:2010:i:2:p:317-326
    DOI: 10.1007/s11238-008-9126-y
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    References listed on IDEAS

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    1. Gal-Or, Esther, 1985. "First Mover and Second Mover Advantages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 649-653, October.
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    3. Vives, Xavier, 1988. "Sequential entry, industry structure and welfare," European Economic Review, Elsevier, vol. 32(8), pages 1671-1687, October.
    4. Steve Dowrick, 1986. "von Stackelberg and Cournot Duopoly: Choosing Roles," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 251-260, Summer.
    5. Anderson, Simon P. & Engers, Maxim, 1992. "Stackelberg versus Cournot oligopoly equilibrium," International Journal of Industrial Organization, Elsevier, vol. 10(1), pages 127-135, March.
    6. Boyer, Marcel & Moreaux, Michel, 1987. "On Stackelberg Equilibria with Differentiated Products: The Critical Role of the Strategy Space," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 217-230, December.
    7. Albaek, Svend, 1990. "Stackelberg Leadership as a Natural Solution under Cost Uncertainty," Journal of Industrial Economics, Wiley Blackwell, vol. 38(3), pages 335-347, March.
    8. David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
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    Cited by:

    1. Toomas Hinnosaar, 2021. "Stackelberg Independence," Journal of Industrial Economics, Wiley Blackwell, vol. 69(1), pages 214-238, March.
    2. Bersani, Alberto M. & Falbo, Paolo & Mastroeni, Loretta, 2022. "Is the ETS an effective environmental policy? Undesired interaction between energy-mix, fuel-switch and electricity prices," Energy Economics, Elsevier, vol. 110(C).
    3. Ludovic Julien & Olivier Musy & Aurélien Saïdi, 2012. "On hierarchical competition in oligopoly," Journal of Economics, Springer, vol. 107(3), pages 217-237, November.
    4. Subhadip Chakrabarti & Robert Gilles & Emiliya Lazarova, 2011. "Strategic behavior under partial cooperation," Theory and Decision, Springer, vol. 71(2), pages 175-193, August.

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    More about this item

    Keywords

    Cournot competition; Stackelberg; Preemption; C72; D43; L11;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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