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Stackelberg versus Cournot oligopoly equilibrium

1992; Elsevier BV; Volume: 10; Issue: 1 Linguagem: Inglês

10.1016/0167-7187(92)90052-z

1873-7986

Simon P. Anderson, Maxim Engers,

Consumer Market Behavior and Pricing

We compare an m-firm Cournot model with a hierarchical Stackelberg model where m Firms choose outputs sequentially. The Stackelberg equilibrium price is lower, so output and total surplus are higher; total profits are lower. While the first mover in a Stackelberg duopoly earns more than a Cournot duopolist, this is not necessarily true for m > 2. We find a surprisingly simple relation which determines whether Cournot profit exceeds the Stackelberg leader's. Finally we consider a game (with firms choosing whether to reveal their outputs) which includes Stackelberg and Cournot as possible outcomes: the equilibrium is Stackelberg.