Stackelberg and Cournot competition under equilibrium limit pricing
Proposes a model which shows that Stackelberg competition is not necessarily welfare- enhancing compared with Cournot competition. Shows that, although in a simple duopoly model prices in a Stackelberg equilibrium are lower than in a Cournot equilibrium, this is not necessarily true in an entry-deterrence framework, where post-entry competition is Stackelberg rather than Cournot. Derives conditions under which in this framework Stackelberg competition leads to lower expected welfare, in the case where demand is linear.
Volume (Year): 23 (1996)
Issue (Month): 5/6 (October)
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