A note on Stackelberg competition

Ludovic Julien ()
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Ludovic Julien: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique

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Abstract: This note investigates a Stackelberg–Nash competition model. We determine the conditions under which the leaders may achieve better profits than the followers when all firms compete on quantity in a two stage game. We focus on the properties of the followers' best response functions. It is shown that the Stackelberg equilibrium may coincide with the Cournot equilibrium. In addition, the followers may achieve higher profits than the leaders. Such results put forward the working and the consequences of strategic complementarities. These results are illustrated with three examples.

Keywords: Stackelberg-Nash equilibrium; Reaction functions; Market demand functions; Strategic complementarities (search for similar items in EconPapers)
Date: 2011-01-11
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Published in Journal of Economics, 2011, 103 (2), pp.171-187. ⟨10.1007/s00712-010-0187-3⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05758793

DOI: 10.1007/s00712-010-0187-3

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