Abstract
The purpose of this article is to investigate the properties of equilibrium in a market with a leader. In particular, we examine how the equilibrium values depend on existing competitors. When the number of competitors is exogenously given, most equilibrium values, including the leader’s strategies, depend on the structure of the competitors: the number of incumbent competitors, their technologies, and their objective functions. In contrast, when an entry is endogenous, the equilibrium values, including not only the leader’s strategies but the entrants’ as well, are independent of such properties of the incumbent competitors. We provide several applications of our main result in industrial organization issues.
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Cato, S., Oki, R. Leaders and competitors. J Econ 107, 239–255 (2012). https://doi.org/10.1007/s00712-012-0271-y
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DOI: https://doi.org/10.1007/s00712-012-0271-y