Stability Properties in a Dynamic Stackelberg Oligopoly Model

John A. Rickard

The Economic Record, 1980, vol. 56, issue 154, 253-256

Abstract: The paper considers the oligopoly problem which arises when sellers adopt the ‘Stackelberg strategy’. Using this strategy, each seller maximizes his profit function on the assumption that each of his rivals adopts the usual Cournot assumption. The effects of an incomplete adjustment process and variable marginal cost are considered. A necessary and sufficient condition for the stability of the solution w obtained. For constant marginal cost the solution is only stable for three or fewer sellers. In general, increasing marginal cost has a stabilizing effect on the solution but the stability is suprisingly independent of the speed of adjustment.

Date: 1980
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