The Non-Robustness of the Nash-Stackelberg-Hybrid Equilibrium

In a simple, standard sequential search model, the Nash-Stackelberg-Hybrid equilibrium is shown, in general, to be non-robust when the assumption that all firms are constrained to operate one outlet is dropped. Unless the firms are constrained from increasing the number of outlets or the price, they will open additional outlets to increase their market power. In a standard duopoly model an equilibrium featuring both firms operating multiple outlets is shown to exist.