von Stackelberg and Cournot Duopoly: Choosing Roles
Under what circumstances will firms agree on the choice of roles of leader and follower in the von Stackelberg duopoly model? A key determinant is the slope of the firms' reaction function (in either price or quantity space). The duopolists will disagree over the choice of roles if they have downward-sloping reaction functions. Each will prefer to be the leader. They will also disagree if they have upward-sloping reaction functions and similar profit functions. Each will prefer that the other be the leader. Preferences between von Stackelberg and Cournot outcomes are also considered.
Volume (Year): 17 (1986)
Issue (Month): 2 (Summer)
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