Stackelberg equilibrium with multiple firms and setup costs

Risultato della ricerca: Article

1 Citazione (Scopus)

Abstract

I provide conditions that guarantee that a Stackelberg game with a setup cost and an integer number of identical leaders and followers has an equilibrium in pure strategies. The main feature of the game is that when the marginal follower leaves the market the price jumps up, so that a leader’s payoff is neither continuous nor quasiconcave. To show existence I check that a leader’s value function satisfies the following single crossing condition: When the other leaders produce more the leader never accommodates entry of more followers. If demand is strictly logconcave, and if marginal costs are both non decreasing and not flatter than average costs, then a Stackelberg equilibrium exists. Besides showing existence I characterize the equilibrium set and provide a number of results that contribute to the applied literature. As the number of leaders increases, leaders produce more and eventually they deter entry. Leaders produce more than the Cournot best reply, but they may underinvest in entry deterrence. As the number of followers increases, leaders become more aggressive. When this number is large, if leaders can produce the limit quantity and at the same time have market power, then they deter entry.
Lingua originaleEnglish
pagine (da-a)86-102
Numero di pagine17
RivistaDefault journal
Volume73
Stato di pubblicazionePublished - 2017

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Stackelberg Equilibrium
Setup Cost
Costs
Stackelberg Game
Log-concave
Average Cost
Value Function
Jump
Strictly
Business
Setup cost
Stackelberg equilibrium
Game
Integer

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Applied Mathematics

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Stackelberg equilibrium with multiple firms and setup costs. / Tesoriere, Antonio.

In: Default journal, Vol. 73, 2017, pag. 86-102.

Risultato della ricerca: Article

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