Paper #190

Títol:

Endogenous Stackelberg leadership

Autors:

Eric van Damme i Sjaak Hurkens

Data:

Novembre 1996

Resum:

We consider a linear quantity setting duopoly game and analyze which of the players will commit when both players have the possibility to do so. To that end, we study a 2-stage game in which each player can either commit to a quantity in stage 1 or wait till stage 2. We show that committing is more risky for the high cost firm and that, consequently, risk dominance considerations, as in Harsanyi and Selten (1988), allow the conclusion that only the low cost firm will choose to commit. Hence, the low cost firm will emerge as the endogenous Stackelberg leader.

Paraules clau:

Duopoly, Stackelberg, equilibrium selection

Codis JEL:

C72, D43

Àrea de Recerca:

Microeconomia

Publicat a:

Games and Economic Behavior, 28, 1, (1999), pp. 105-129

Descarregar el paper en format PDF