A note on Stackelberg competition |
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Authors: | Ludovic A Julien |
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Institution: | (1) Department of Economics, University of Milan, Bicocca and Intertic, P.za Ateneo Nuovo 1, 20126 Milan, Italy |
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Abstract: | This note investigates a Stackelberg–Nash competition model. We determine the conditions under which the leaders may achieve
better profits than the followers when all firms compete on quantity in a two stage game. We focus on the properties of the
followers’ best response functions. It is shown that the Stackelberg equilibrium may coincide with the Cournot equilibrium.
In addition, the followers may achieve higher profits than the leaders. Such results put forward the working and the consequences
of strategic complementarities. These results are illustrated with three examples. |
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Keywords: | |
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