Do Followers Really Matter in Stackelberg Competition?

Ludovic Julien (), Oliver Musy and Aurélien Saïdi ()
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Ludovic Julien: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique
Oliver Musy: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique
Aurélien Saïdi: ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay, IDHES - Institutions et Dynamiques Historiques de l'Économie et de la Société - UP1 - Université Paris 1 Panthéon-Sorbonne - UP8 - Université Paris 8 - UPN - Université Paris Nanterre - UEVE - Université d'Évry-Val-d'Essonne - CNRS - Centre National de la Recherche Scientifique - ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay

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Abstract: In this paper, we consider a T-stage linear model of Stackelberg oligopoly. First, we show geometrically and analytically that under the two conditions of linear market demand and identical constant marginal costs, the T-stage Stackelberg model reduces to a model where T oligopolies exploit residual demand sequentially. At any stage, leaders behave as if followers did not matter. Second, we study social welfare and convergence toward competitive equilibrium. Especially, we consider the velocity of convergence as the number of firms increases. The convergence is faster when reallocating firms from the most to the less populated cohort until equalizing the size of all cohorts.

Date: 2012-03-22
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Published in Lecturas de Economía, 2012, 75, pp.11-27. ⟨10.17533/udea.le.n75a11474⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05758776

DOI: 10.17533/udea.le.n75a11474

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