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On Stackelberg Equilibria with Differentiated Products: The Critical Role of the Strategy Space

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  • Boyer, Marcel
  • Moreaux, Michel

Abstract

Comparing the Nash and Stackelberg equilibria in a differentiated-products model under price and for quantity strategy s paces, it is shown that, whatever the role (leader, follower, Nash co mpetitor), it is always more profitable to be a quantity (price) sett er if the goods are substitutes (complements). However, for the consu mer, price competition is always the best. Concerning total surpluses , the ranking is first the Bertrand equilibrium, then the price Stack elberg, followed by the mixed Nash, the quantity Stackelberg, and the Cournot equilibria for both the complement and substitute cases. Copyright 1987 by Blackwell Publishing Ltd.

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  • 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.
  • Handle: RePEc:bla:jindec:v:36:y:1987:i:2:p:217-30
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    Cited by:

    1. L. Lambertini, 1997. "Time Consistency in Games of Timing," Working Papers 302, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Lambertini, Luca, 1997. "Prisoners' Dilemma in Duopoly (Super)Games," Journal of Economic Theory, Elsevier, vol. 77(1), pages 181-191, November.
    3. F. Delbono & L. Lambertini, 2016. "Choosing Roles under Supply Function Competition," Working Papers wp1069, Dipartimento Scienze Economiche, Universita' di Bologna.
    4. Acharyya, Rajat & Marjit, Sugata, 1998. "To Liberalize or Not to Liberalize an LDC-Market with an Inefficient Incumbent," International Review of Economics & Finance, Elsevier, vol. 7(3), pages 277-296.
    5. Thierry Lafay, 2010. "A linear generalization of Stackelberg’s model," Theory and Decision, Springer, vol. 69(2), pages 317-326, August.
    6. Goddard, Ellen W. & Shank, Benjamin & Panter, Chris & Nilsson, Tomas K.H. & Cash, Sean B., 2007. "Canadian Chicken Industry: Consumer Preferences, Industry Structure and Producer Benefits from Investment in Research and Advertising," Project Report Series 52088, University of Alberta, Department of Resource Economics and Environmental Sociology.
    7. Banerjee, Dyuti S. & Chatterjee, Ishita, 2014. "Exploring Stackelberg profit ordering under asymmetric product differentiation," Economic Modelling, Elsevier, vol. 36(C), pages 309-315.
    8. Lambertini, Luca, 2000. "Strategic Delegation and the Shape of Market Competition," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(5), pages 550-570, November.
    9. Scrimitore, Marcella, 2010. "Managerial Incentives and Stackelberg Equilibria in Oligopoly," MPRA Paper 24245, University Library of Munich, Germany.
    10. Lambertini, Luca, 1997. "Unicity of the equilibrium in the unconstrained Hotelling model," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 785-798, November.
    11. Boyer, Marcel & Moreaux, Michel, 1985. "L’équilibre concurrentiel comme limite de suites d’équilibres stratégiques de Stackelberg," L'Actualité Economique, Société Canadienne de Science Economique, vol. 61(3), pages 299-315, septembre.
    12. L. Lambertini & S. Poddar & D. Sasaki, 1998. "Price versus Quantity Competition with Cost Sharing," Working Papers 343, Dipartimento Scienze Economiche, Universita' di Bologna.
    13. Sang-Ho Lee, 2002. "Pricing, Quality-Setting, and Order of Plays in an Online Information Market," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 1(3), pages 179-191, December.
    14. Luciano Fanti, 2016. "Endogenous timing under price competition and unions," International Journal of Economic Theory, The International Society for Economic Theory, vol. 12(4), pages 401-413, December.
    15. Luca Lambertini, 2000. "Extended Games Played by Managerial Firms," The Japanese Economic Review, Japanese Economic Association, vol. 51(2), pages 274-283, June.
    16. Kovenock, Dan & Widdows, Kealoha, 1998. "Price leadership and asymmetric price rigidity," European Journal of Political Economy, Elsevier, vol. 14(1), pages 167-187, February.
    17. Boyer, Marcel & Moreaux, Michel, 1985. "La convergence d’équilibres stratégiques en prix-quantités vers l’équilibre concurrentiel," L'Actualité Economique, Société Canadienne de Science Economique, vol. 61(4), pages 411-427, décembre.
    18. Giulio ECCHIA & Luca LAMBERTINI, 2001. "Endogenous Timing and Quality Standards in a Vertically Differentiated Duopoly," Discussion Papers (REL - Recherches Economiques de Louvain) 2001021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    19. L. Lambertini, 1996. "The International Coordination of Monetary Policy: A Game-Theoretic Reformulation," Working Papers 250, Dipartimento Scienze Economiche, Universita' di Bologna.
    20. Ray-Yun Chang & Yan-Shu Lin & Jin-Li Hu, 2015. "Mixed Competition and Patent Licensing," Australian Economic Papers, Wiley Blackwell, vol. 54(4), pages 229-249, December.
    21. Hirose, Kosuke & Matsumura, Toshihiro, 2017. "Comparing Welfare and Profit in Quantity and Price Competition within Stackelberg Mixed Duopolies," MPRA Paper 77700, University Library of Munich, Germany.
    22. L. Lambertini, 1995. "Cournot Vs Stackelberg Equilibria With Entrepreneurial and Labour Managed Firms," Working Papers 217, Dipartimento Scienze Economiche, Universita' di Bologna.

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