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A linear generalization of Stackelberg’s model

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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.

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Correspondence to Thierry Lafay.

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

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  • Cournot competition
  • Stackelberg
  • Preemption

JEL Classification

  • C72
  • D43
  • L11