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.

Tesoriere, A. (2017). Stackelberg equilibrium with many leaders and followers. The case of zero fixed costs. RESEARCH IN ECONOMICS, 71(1), 102-117 [10.1016/j.rie.2016.11.004].

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

TESORIERE, Antonio
2017

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.
Settore SECS-P/06 - Economia Applicata
Settore SECS-P/01 - Economia Politica
Tesoriere, A. (2017). Stackelberg equilibrium with many leaders and followers. The case of zero fixed costs. RESEARCH IN ECONOMICS, 71(1), 102-117 [10.1016/j.rie.2016.11.004].
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/10447/231097
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