TOOMAS HINNOSAAR TOOMAS.HINNOSAAR@NOTTINGHAM.AC.UK
Associate Professor
Stackelberg Independence
Hinnosaar, Toomas
Authors
Abstract
The standard model of sequential capacity choices is the Stackelberg quantity leadership model with linear demand. I show that under the standard assumptions, leaders' actions are informative about market conditions and independent of lead-ers' beliefs about the arrivals of followers. However, this Stackelberg independence property relies on all standard assumptions being satisfied. It fails to hold whenever the demand function is non-linear, marginal cost is not constant, goods are differentiated, firms are non-identical, or there are any externalities. I show that small deviations from the linear demand assumption may make the leaders' choices completely uninformative.
Citation
Hinnosaar, T. (2021). Stackelberg Independence. Journal of Industrial Economics, 69(1), 214-238. https://doi.org/10.1111/joie.12244
Journal Article Type | Article |
---|---|
Acceptance Date | Jun 11, 2020 |
Online Publication Date | Jul 17, 2020 |
Publication Date | 2021-03 |
Deposit Date | Jun 24, 2020 |
Publicly Available Date | Jul 18, 2021 |
Journal | Journal of Industrial Economics |
Print ISSN | 0022-1821 |
Publisher | Wiley |
Peer Reviewed | Peer Reviewed |
Volume | 69 |
Issue | 1 |
Pages | 214-238 |
DOI | https://doi.org/10.1111/joie.12244 |
Keywords | sequential games; oligopolies; Stackelberg leadership model |
Public URL | https://nottingham-repository.worktribe.com/output/4706198 |
Publisher URL | https://onlinelibrary.wiley.com/doi/full/10.1111/joie.12244 |
Files
Stackelberg
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Publisher Licence URL
https://creativecommons.org/licenses/by-nc-nd/4.0/
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