Stackelberg leadership in a dynamic duopoly with stochastic capital accumulation
AbstractI propose a dynamic duopoly model where firms enter simultaneously but compete hierarchically á la Stackelberg at each instant over time. They accumulate capacity through costly investment, with capital accumulation dynamics being affected by an additive shock the mean and variance of which are known. The main findings are the following. First, the Stackelberg game is uncontrollable by the leader; hence, it is time consistent. Second, the leader invests more than the follower; as a result, in the steady state, the leader’s capacity and profits are larger than the follower’s. Therefore, the present analysis does not confirm Gibrat’s Law, since the individual growth rate is determined by the timing of moves. Copyright Springer-Verlag Berlin/Heidelberg 2005
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Journal of Evolutionary Economics.
Volume (Year): 15 (2005)
Issue (Month): 4 (October)
Contact details of provider:
Web page: http://link.springer.de/link/service/journals/00191/index.htm
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- L. Lambertini, 2005. "Dynamic Oligopoly ˆ la Stackelberg with Stochastic Capital Accumulation," Working Papers 547, Dipartimento Scienze Economiche, Universita' di Bologna.
- D. Dragone & L. Lambertini & G. Leitmann & A. Palestini, 2009. "A Stochastic Optimal Control Model of Pollution Abatement," Working Papers 681, Dipartimento Scienze Economiche, Universita' di Bologna.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.