IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-01385836.html
   My bibliography  Save this paper

On hierarchical competition in oligopoly

Author

Listed:
  • Ludovic A. Julien

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, LEG - Laboratoire d'Economie et de Gestion - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique)

  • Olivier Musy

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Aurélien Saidi

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

In this paper, we consider a hierarchical oligopoly model, in which firms compete on quantities of an homogeneous product. We provide a proof and an interpretation that under the three necessary and sufficient conditions of linear aggregate demand, constant and identical marginal costs, the strategy of leaders at any stage depends neither on the number of leaders who play after nor on the number of remaining stages. So, all firms behave as Cournotian oligopolists on the residual demand. We show that these three assumptions are not only sufficient but also necessary. Any departure from any of these assumptions rules out this property.

Suggested Citation

  • Ludovic A. Julien & Olivier Musy & Aurélien Saidi, 2012. "On hierarchical competition in oligopoly," Post-Print hal-01385836, HAL.
    • Handle: RePEc:hal:journl:hal-01385836
    DOI: 10.1007/s00712-012-0286-4
    Note: View the original document on HAL open archive server: https://hal.parisnanterre.fr/hal-01385836
    as

    Download full text from publisher

    File URL: https://hal.parisnanterre.fr/hal-01385836/document
    Download Restriction: no
    File URL: https://libkey.io/10.1007/s00712-012-0286-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thierry Lafay, 2010. "A linear generalization of Stackelberg’s model," Theory and Decision, Springer, vol. 69(2), pages 317-326, August.
    2. Federico Etro, 2008. "Stackelberg Competition with Endogenous Entry," Economic Journal, Royal Economic Society, vol. 118(532), pages 1670-1697, October.
    3. Ludovic A. Julien & Olivier Musy, 2011. "A Generalized Oligopoly Model With Conjectural Variations," Metroeconomica, Wiley Blackwell, vol. 62(3), pages 411-433, July.
    4. Amir, Rabah & Grilo, Isabel, 1999. "Stackelberg versus Cournot Equilibrium," Games and Economic Behavior, Elsevier, vol. 26(1), pages 1-21, January.
    5. Hanif D. Sherali, 1984. "A Multiple Leader Stackelberg Model and Analysis," Operations Research, INFORMS, vol. 32(2), pages 390-404, April.
    6. Anderson, Simon P. & Engers, Maxim, 1992. "Stackelberg versus Cournot oligopoly equilibrium," International Journal of Industrial Organization, Elsevier, vol. 10(1), pages 127-135, March.
    7. John S. Heywood & Matthew McGinty, 2008. "Leading and Merging: Convex Costs, Stackelberg, and the Merger Paradox," Southern Economic Journal, John Wiley & Sons, vol. 74(3), pages 879-893, January.
    8. Boyer, Marcel & Moreaux, Michel, 1986. "Perfect competition as the limit of a hierarchical market game," Economics Letters, Elsevier, vol. 22(2-3), pages 115-118.
    9. Daughety, Andrew F, 1990. "Beneficial Concentration," American Economic Review, American Economic Association, vol. 80(5), pages 1231-1237, December.
    10. Matsumura, Toshihiro, 1999. "Quantity-setting oligopoly with endogenous sequencing," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 289-296, February.
    11. Richard Watt, 2002. "A Generalized Oligopoly Model," Metroeconomica, Wiley Blackwell, vol. 53(1), pages 46-55, February.
    12. Pal, Debashis & Sarkar, Jyotirmoy, 2001. "A Stackelberg Oligopoly with Nonidentical Firms," Bulletin of Economic Research, Wiley Blackwell, vol. 53(2), pages 127-134, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daniel Cracau & Benjamin Franz, 2013. "Judo Economics in Markets with Multiple Firms," FEMM Working Papers 130013, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    2. Julien, Ludovic & Musy, Oliver & Saidi, Aurélien, 2011. "Do Followers Really Matter in Stackelberg Competition?," Revista Lecturas de Economía, Universidad de Antioquia, CIE, November.
    3. Toomas Hinnosaar, 2021. "Stackelberg Independence," Journal of Industrial Economics, Wiley Blackwell, vol. 69(1), pages 214-238, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ludovic Julien & Olivier Musy & Aurélien Saïdi, 2011. "Do Followers Really Matter in Stackelberg Competition?," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 75, pages 11-27.
    2. Ludovic Julien, 2011. "A note on Stackelberg competition," Journal of Economics, Springer, vol. 103(2), pages 171-187, June.
    3. Attila Tasnádi, 2010. "Quantity-setting games with a dominant firm," Journal of Economics, Springer, vol. 99(3), pages 251-266, April.
    4. 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).
    5. Colombo, Luca & Labrecciosa, Paola, 2019. "Stackelberg versus Cournot: A differential game approach," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 239-261.
    6. Cumbul, Eray, 2021. "Stackelberg versus Cournot oligopoly with private information," International Journal of Industrial Organization, Elsevier, vol. 74(C).
    7. Qiu, Hong & Zhu, Nan & Peng, Qiyuan, 2021. "Can a small fish become a big fish? Modeling leader-generating mergers in a Stackelberg market," Finance Research Letters, Elsevier, vol. 38(C).
    8. Tesoriere, Antonio, 2008. "Endogenous timing with infinitely many firms," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1381-1388, November.
    9. Amir, Rabah & Stepanova, Anna, 2006. "Second-mover advantage and price leadership in Bertrand duopoly," Games and Economic Behavior, Elsevier, vol. 55(1), pages 1-20, April.
    10. Miguel Cantillo, 2023. "Imperfect bank competition, borrower adverse selection, and the transmission of monetary policy," Working Papers 202301, Universidad de Costa Rica, revised Mar 2023.
    11. Hiroaki Ino & Toshihiro Matsumura, 2012. "How Many Firms Should Be Leaders? Beneficial Concentration Revisited," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(4), pages 1323-1340, November.
    12. Tesoriere, Antonio, 2017. "Stackelberg equilibrium with multiple firms and setup costs," Journal of Mathematical Economics, Elsevier, vol. 73(C), pages 86-102.
    13. Matsumura, Toshihiro, 1999. "Quantity-setting oligopoly with endogenous sequencing," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 289-296, February.
    14. Daw Ma, 2014. "Can Emerging Market Protectionism Be Beneficial?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(9), pages 1175-1189, September.
    15. Tesoriere, Antonio, 2017. "Stackelberg equilibrium with many leaders and followers. The case of zero fixed costs," Research in Economics, Elsevier, vol. 71(1), pages 102-117.
    16. Daniel Cracau & Benjamin Franz, 2013. "Judo Economics in Markets with Multiple Firms," FEMM Working Papers 130013, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    17. Toomas Hinnosaar, 2021. "Stackelberg Independence," Journal of Industrial Economics, Wiley Blackwell, vol. 69(1), pages 214-238, March.
    18. Yasunori Okumura, 2017. "Asymmetric equilibria under price cap regulation," Journal of Economics, Springer, vol. 121(2), pages 133-151, June.
    19. TESORIERE, Antonio, 2006. "Endogenous timing with free entry," LIDAM Discussion Papers CORE 2006093, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    20. Danyang Xie, 2003. "Toward a Theory of Asset Subscription," Finance 0303001, University Library of Munich, Germany.

    More about this item

    Keywords

    Hierarchical model; Linear economy; Oligopoly competition;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-01385836. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.