Economics at your fingertips  

Stackelberg equilibrium with many leaders and followers. The case of zero fixed costs

Antonio Tesoriere

Research in Economics, 2017, vol. 71, issue 1, 102-117

Abstract: I study a version of the Stackelberg game with many identical firms in which leaders and followers use a continuous cost function with no fixed cost. Using lattice theoretical methods I provide a set of conditions that guarantee that the game has an equilibrium in pure strategies. With convex costs the model shows the same properties as a quasi-competitive Cournot model. The same happens with concave costs, but only when the number of followers is small. When this number is large the leaders preempt entry. I study the comparative statics and the limit behavior of the equilibrium and I show how the main determinants of market structure interact. More competition between the leaders always displaces the followers. Instead, how a stronger threat of entry affects the equilibrium depends on the technology. With strictly convex costs it is the followers that eventually displace the leaders.

Keywords: Stackelberg equilibrium; Cournot equilibrium; Existence of the equilibrium; Supermodular games; Entry preemption; Endogenous market structures (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Research in Economics is currently edited by Federico Etro

More articles in Research in Economics from Elsevier
Series data maintained by Dana Niculescu ().

Page updated 2017-12-16
Handle: RePEc:eee:reecon:v:71:y:2017:i:1:p:102-117