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On the first mover advantage in Stackelberg quantity games

Kurt Annen

Journal of Economics, 2019, vol. 126, issue 3, No 3, 249-258

Abstract: Abstract In economic models, “sales equals production” is typically treated as an identity and not as an equilibrium outcome. This distinction, however, matters when production is sequential because of off-equilibrium path behavior. This paper shows that the first mover advantage in the standard Stackelberg oligopoly game in quantities may be reduced when “sales equals production” is no longer treated as an identity. Moving first does not per se produce a strategic advantage. It is only first moves that are sufficiently costly that produce this advantage. With costless production, the advantage disappears completely and the Cournot–Nash outcome is obtained.

Keywords: Oligopoly; Stackelberg competition; Sales versus production (search for similar items in EconPapers)
JEL-codes: L13 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00712-018-0622-4

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