stackelberg model assumptions
In this paper, I first show that under the standard assumptions of the Stackelberg model, … Stackelberg model. 3Julien et al. Stackelberg Model of Duopoly Stackelberg’s Model of Duopoly also has to do with companies trying to decide how much of a homogeneous good to produce. Stackelberg Model Note: When firms are symmetric, i.e. Several other assumptions and notation will be presented later when they are needed. Stackelberg duopoly, also called Stackelberg competition, is a model of imperfect competition based on a non-cooperative game. In the first period the leader chooses its quantity. 2For a literature review on Stackelberg games, see Julien (2018), and for sequential contests, see Konrad(2009). Stackelberg Model Differences between Cournot and Stackelberg: In Cournot, firm 1 chooses its quantity given the quantity of firm 2 In Stackelberg, firm 1 chooses its quantity given the reaction curve of firm 2 Nota: the assumption that the leader cannot revise its decision i.e. they have the same costs, then the Stackelberg solution is more efficient than Cournot (higher total they have This is the major contribution of the paper. Stackelberg Model 2-period model Same assumptions as the Cournot Model except that firms decide sequentially. Many works studied on complex dynamics of Cournot or Stackelberg games, but few references discussed a dynamic game model combined with the Cournot game phase and Stackelberg game phase. STACKELBERG INDEPENDENCE* Toomas Hinnosaar † The standard model of sequential capacity choices is the Stackelberg quantity leadership model with linear demand. Under the assumption that R&D spillovers only flow from the R&D leader to the R&D follower, a duopoly Stackelberg–Cournot game with heterogeneous expectations is considered in this paper. Why doesn't the first-mover announce that its production is Q1 = 30 in order to exclude the second firm from the market (i.e., Q2 = … I show that under the standard assumptions, leaders’ actions are informative about market conditions and independent of leaders’ beliefs about the arrivals of followers. In the Stackelberg model, suppose the first-mover has MR = 15 - Q1, the second firm has reaction function Q2 = 15 - Q1/2, and production occurs at zero marginal cost. This ... Industrial Organization-Matilde Machado Stackelberg Model 16 3.3. (2012) show that the standard assumptions are both necessary and suﬃcient for a stronger property than the Stackelberg independence: taking into account the best-responses, leaders It is one of the three (Cournot, Bertrand; Stackelberg) models that are commonly discussed in introductory microeconomics courses. A natural model to study such markets is the Stackelberg quantity leadership model, where firms choose their quantities (capacities) while observing the moves of earlier entrants. ... and supplier-Stackelberg model with trade credit. Stackelberg Model Note: When firms are symmetric, i.e. Same assumptions as the Cournot Model except ... Industrial Organization- Matilde Machado Stackelberg Model 16 3.3. • If Firm 1 undercuts its rival’s price, Firm 1 captures The Stackelberg model of oligopoly or Stackelberg dominant firm model is an important oligopoly model that was first formulated by Heinrich Freiherr von Stackelberg in 1934. 14.7 Bertrand Oligopoly Model • Assumptions of the model: •Firms have identical costs (and constant MC=$5) •Firms produce identical goods • Conditional on the price charged by Firm 2, p 2, Firm 1 wants to charge slightly less in order to attract customers. The standard model of sequential capacity choices is the Stackelberg quantity leadership model with linear demand. The following assumptions and notation are used in developing the proposed model throughout the paper. The principal diﬁerence between the Cournot model and the Stack-elberg model is that instead of moving simultaneously (as in the Cournot model) the ﬂrms now move sequentially.
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