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The Stackelberg equilibrium as a consistent conjectural equilibrium

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  • Ludovic Julien

    (LEG - Laboratoire d'Economie et de Gestion - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique, EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Olivier Musy
  • Aurélien Saidi

Abstract

We consider a static game with conjectural variations where some firms make conjectures while others do not. Two propositions are proved. We first show that there exists a continuum of conjectural variations such that the conjectural equilibrium locally coincides with the Stackelberg equilibrium (Proposition 1). Second, we define the conditions under which a conjectural equilibrium is a locally consistent equilibrium (i.e. such that conjectures are fulfilled). The concept of (local) consistency is restricted to firms making conjectures. Two conditions on consistency are featured: consistency within a cohort and consistency among cohorts. The Stackelberg equilibrium fulfills only the latter condition (Proposition 2). An example is provided.

Suggested Citation

  • Ludovic Julien & Olivier Musy & Aurélien Saidi, 2011. "The Stackelberg equilibrium as a consistent conjectural equilibrium," Post-Print halshs-01228003, HAL.
    • Handle: RePEc:hal:journl:halshs-01228003
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01228003
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    1. Ludovic A. Julien & Olivier Musy, 2015. "A Review of Heinrich von Stackelberg's Book: ‘Market Structure and Equilibrium’," Australian Economic Papers, Wiley Blackwell, vol. 54(1), pages 52-60, March.
    2. Ibrahim Abada & Andreas Ehrenmann, 2016. "The prisoner’s dilemma in Cournot models: when endogenizing the level of competition leads to competitive behaviors," Cambridge Working Papers in Economics 1641, Faculty of Economics, University of Cambridge.

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    More about this item

    Keywords

    Stackelberg Equilibrium;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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