6533b855fe1ef96bd12b0a26

RESEARCH PRODUCT

Stackelberg equilibrium with many leaders and followers. The case of zero fixed costs

Antonio Tesoriere

subject

Stackelberg equilibriumEconomics and EconometricsComparative staticsSupermodular gameEndogenous market structures05 social sciencesExistence of the equilibriumCournot competitionEntry preemptionSettore SECS-P/06 - Economia ApplicataCournot equilibriumMicroeconomicsMarket structure0502 economics and businessTheoretical methodsStackelberg competitionEconomics050207 economicsSettore SECS-P/01 - Economia PoliticaConvex functionFixed costMathematical economics050205 econometrics

description

Abstract I study a version of the Stackelberg game with many identical firms in which leaders and followers use a continuous cost function with no fixed cost. Using lattice theoretical methods I provide a set of conditions that guarantee that the game has an equilibrium in pure strategies. With convex costs the model shows the same properties as a quasi-competitive Cournot model. The same happens with concave costs, but only when the number of followers is small. When this number is large the leaders preempt entry. I study the comparative statics and the limit behavior of the equilibrium and I show how the main determinants of market structure interact. More competition between the leaders always displaces the followers. Instead, how a stronger threat of entry affects the equilibrium depends on the technology. With strictly convex costs it is the followers that eventually displace the leaders.

yearjournalcountryeditionlanguage
2017-03-01Research in Economics
https://doi.org/10.1016/j.rie.2016.11.004