von Stackelberg and Cournot Duopoly: Choosing Roles
Volume: Volume 17, No. 2
Issue: Summer 1986
Pages: pp. 251-260
Authors: Steve Dowrick
Title: von Stackelberg and Cournot Duopoly: Choosing Roles
Abstract: Under what circumstances will firms agree on the choice of roles of leader and follower in the von Stackelberg duopoly model? A key determinant is the slope of the firms' reaction function (in either price or quantity space). The duopolists will disagree over the choice of roles if they have downward-sloping reaction functions. Each will prefer to be the leader. They will also disagree if they have upward-sloping reaction functions and similar profit functions. Each will prefer that the other be the leader. Preferences between von Stackelberg and Cournot outcomes are also considered.
JEL Classification
Microeconomics Theory of Firm and Industry under Imperfectly Competitive Market Structures (0226)
Market Structure: Industrial Organization and Corporate Strategy (6110)