Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

A linear generalization of Stackelberg’s model

  • 110 Accesses

  • 3 Citations

Abstract

We study an extension of Stackelberg’s model in which many firms can produce at many different times. Demand is affine, while cost is linear. In this setting, we investigate whether Stackelberg’s results in a two-firm game are robust when the number of firms increases. We show that firms may not need to anticipate further entries, leaders might earn less than in the simultaneous game, and, whatever its cost and its time of entry, the firm’s entry always improves welfare.

This is a preview of subscription content, log in to check access.

References

  1. Albaek S. (1990) Stackelberg leadership as a natural solution under cost uncertainty. Journal of Industrial Economics 3: 335–347

  2. Anderson S.P., Engers M. (1992) Stackelberg versus cournot oligopoly equilibrium. International Journal of Industrial Organization 10: 127–135

  3. Boyer M., Moreaux M. (1987) On Stackelberg equilibria with differentiated products: The critical role of the strategy space. Journal of Industrial Economics 36: 217–230

  4. Cournot A.A. (1838) Recherches sur les principes mathématiques de la théorie des richesses. Hachette, Paris

  5. Dixit A. (1980) The role of investment in entry-deterrence. Economic Journal 90: 95–106

  6. Dowrick S. (1986) von Stackelberg and Cournot duopoly: Choosing roles. Rand Journal of Economics 17(2): 251–260

  7. Gal-Or E. (1985) First mover and second mover advantages. International Economic Review 26(3): 649–653

  8. Kreps D., Scheinkman J. (1983) Quantity precommitment and Bertrand competition yield Cournot outcomes. Bell Journal 14: 326–337

  9. Robson A.J. (1990) Stackelberg and Marshall. The American Economic Review 80(1): 69–82

  10. von Stackelberg H. (1934) Marktform und Gleichgwicht. Springer Verlag, Berlin

  11. Vives X. (1988) Sequential entry, industry structure and welfare. European Economic Review 32: 1671–1687

Download references

Author information

Correspondence to Thierry Lafay.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Lafay, T. A linear generalization of Stackelberg’s model. Theory Decis 69, 317–326 (2010). https://doi.org/10.1007/s11238-008-9126-y

Download citation

Keywords

  • Cournot competition
  • Stackelberg
  • Preemption

JEL Classification

  • C72
  • D43
  • L11