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Theory and Decision

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24.05.2016

Cournot and Stackelberg equilibrium under strategic delegation: an equivalence result

verfasst von: Giorgos Stamatopoulos

Erschienen in: Theory and Decision | Ausgabe 4/2016

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Abstract

This paper uses the theory of strategic delegation to derive an equivalence between the models of simultaneous and sequential quantity competition in oligopoly. It shows that Cournot and Stackelberg equilibria under managerial delegation are identical provided delegation is sequential under the first framework and simultaneous under the second. Furthermore, the first (second) mover in the game under sequential delegation earns the same profit as the second (first) mover in the game under sequential quantity competition.

Vorheriger Artikel The possibility of Arrovian social choice with the process of nomination

Nächster Artikel Multiple rounds in a chain store game

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The issue of contract observability is discussed on pages 17–18.

The results of the paper do not change if we assume that the objective functions are combinations of profit and revenue (Fershtman and Judd 1987; Sklivas 1987).

Game H was first studied by Kopel and Loffler (2008) under a linear demand framework.

An explanation of this equality is given at the end of the example.

In Lemma A1, we also define what small \(p''(Q)\) means.

It is interesting to note that Vardy’s result has been challenged by the findings of experimental work (see Huck and Muller 2000).

The term \((p^G(a))'\) denotes the derivative of the inverse demand function with respect to total quantity Q evaluated at \(Q=Q^G(a)\).

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Titel: Cournot and Stackelberg equilibrium under strategic delegation: an equivalence result
verfasst von: Giorgos Stamatopoulos
Publikationsdatum: 24.05.2016
Verlag: Springer US
Erschienen in: Theory and Decision / Ausgabe 4/2016
Print ISSN: 0040-5833
Elektronische ISSN: 1573-7187
DOI: https://doi.org/10.1007/s11238-016-9548-x

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