This paper shows an endogenous Stackelberg leader-follower relation that stems purely from commitment, not from chronological order of entry. We consider a symmetric duopoly game with a priori demand uncertainty which resolves after a short term. In the beginning, each supplier is allowed to make either a short-term or a long-term fixed-quantity supply contract with retailers. The choice of contractual term lengths depends upon the degree of demand uncertainty as well as time preferences.
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Length: 17 pages Date of creation: 1998 Date of revision: Handle: RePEc:mlb:wpaper:600
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Find related papers by JEL classification: L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games