In economics, duopoly is a market dominated by two firms large enough to influence the market price. Stackelberg presented a dynamic form of duopoly that is also called the “leader-follower” model. We give a quantum perspective on the Stackelberg duopoly that gives a backwards-induction outcome same as the Nash equilibrium in the static form of duopoly also known as the Cournot’s duopoly. We find the two-qubit quantum pure states required for this purpose.

• Received 20 November 2001

DOI:https://doi.org/10.1103/PhysRevA.65.052328