A stackelberg duopoly with binary choices of objectives

Athanasia Mavrommati ()
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Athanasia Mavrommati: Department of Economics, University of Crete

Economics Bulletin, 2012, vol. 32, issue 1, 843-853

Abstract: This paper analyzes a Stackelberg model where firms choose their objective functions (profit or revenue) in order to achieve maximum payoff. The objective of the present work is to demonstrate that depending on the unit cost of production, firms make either asymmetric choices of objectives (low values of the unit cost) or symmetric choices (high values of the unit cost). As a result of these choices, the payoff advantage alternates between the first and the second mover in the market.

Keywords: endogenous objectives; revenue objective; profit objective; first-mover advantage; second-mover advantage. (search for similar items in EconPapers)
JEL-codes: D4 L1 (search for similar items in EconPapers)
Date: 2012-03-10
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Citations: View citations in EconPapers (1)

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