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Industry Dynamics á La Stackelberg with Stochastic Capital Accumulation

In: Entrepreneurship, Growth, and Innovation

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  • Luca Lambertini

    (University of Bologna)

Abstract

5. Conclusions I have described a stochastic differential game in which firms invest to increase productive capacity, following time-consistent open-loop Stackelberg strategies. The equilibrium of the model highlights different growth rates along the saddle path. Accordingly, the analysis carried out in this paper is clearly in contrast with Gibrat’s Law. Moreover, it appears that there are admissible cases where the followers’s growth rates are larger than the leaders’, e.g. when the representative leader is indeed bigger than the representative follower in terms of installed capacity. This may ultimately lead to situations where equilibrium profits are larger for followers than for leaders.

Suggested Citation

  • Luca Lambertini, 2006. "Industry Dynamics á La Stackelberg with Stochastic Capital Accumulation," International Studies in Entrepreneurship, in: Enrico Santarelli (ed.), Entrepreneurship, Growth, and Innovation, chapter 0, pages 23-39, Springer.
    • Handle: RePEc:spr:inschp:978-0-387-32314-5_2
    DOI: 10.1007/0-387-32314-7_2
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    Cited by:

    1. Jeong-Dong Lee, 2009. "Industry Dynamics and Productivity Research," TEMEP Discussion Papers 200929, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.

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