Oligopoly with Leaders

Abstract

This chapter is dedicated to the Stackelberg model which is a particular case of bilevel problems with equilibrium constraints. In Section 5.1, the Stackelberg model is extended to the case of several leaders, and the theorem of existence of a stationary point is obtained. In Section 5.2, we compare the equilibria in the Stackelberg and Cournot models. Section 5.3 presents simple examples of comparison of equilibria in different models: Cournot model, high expectations model, Stackelberg model, and the perfect competition one. These examples illustrate results of Section 5.2. At last, problems of efficient computation of the equilibrium are considered in Section 5.4.