On Stackelberg Equilibria with Differentiated Products: The Critical Role of the Strategy Space

Marcel Boyer and Michel Moreaux

Journal of Industrial Economics, 1987, vol. 36, issue 2, 217-30

Abstract: Comparing the Nash and Stackelberg equilibria in a differentiated-products model under price and for quantity strategy s paces, it is shown that, whatever the role (leader, follower, Nash co mpetitor), it is always more profitable to be a quantity (price) sett er if the goods are substitutes (complements). However, for the consu mer, price competition is always the best. Concerning total surpluses , the ranking is first the Bertrand equilibrium, then the price Stack elberg, followed by the mixed Nash, the quantity Stackelberg, and the Cournot equilibria for both the complement and substitute cases. Copyright 1987 by Blackwell Publishing Ltd.

Date: 1987
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