Do Followers Really Matter in Stackelberg Competition?
AbstractIn this paper, we consider a T-stage linear model of Stackelberg oligopoly. First, we show geometrically and analytically that under the two conditions of linear market demand and identical constant marginal costs, the T-stage Stackelberg model reduces to a model where T oligopolies exploit residual demand sequentially. At any stage, leaders behave as if followers did not matter. Second, we study social welfare and convergence toward competitive equilibrium. Especially, we consider the velocity of convergence as the number of firms increases. The convergence is faster when reallocating firms from the most to the less populated cohort until equalizing the size of all cohorts.
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Bibliographic InfoArticle provided by Universidad de Antioquia, Departamento de Economía in its journal LECTURAS DE ECONOMÍA.
Volume (Year): (2011)
Issue (Month): 75 ()
Postal: Lecturas de Economía, Departamento de Economía, Calle 67, 53-108, Medellin 050010, Colombia.
Other versions of this item:
- Ludovic A. Julien & Olivier Musy & Aurélien W. Saïdi, 2011. "Do followers really matter in Stackelberg competition?," EconomiX Working Papers 2011-10, University of Paris West - Nanterre la Défense, EconomiX.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Ludovic Julien & Olivier Musy & Aurélien Saïdi, 2012. "On hierarchical competition in oligopoly," Journal of Economics, Springer, vol. 107(3), pages 217-237, November.
- John S. Heywood & Matthew McGinty, 2008. "Leading and Merging: Convex Costs, Stackelberg, and the Merger Paradox," Southern Economic Journal, Southern Economic Association, vol. 74(3), pages 879-893, January.
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