Entry License Tax: Stackelberg versus Cournot

Stackelberg versus Cournot Equilibrium

We reconsider Stackelberg’s classical critique of the Cournot duopoly, in the framework of endogenous timing for two-player games. For quantity duopoly we provide different sets of minimal conditions, directly on the demand and cost functions, yielding respectively the simultaneous and the two sequential modes of play. While our findings essentially confirm the predominance of the former, they ...

Endogenous Timing in Pollution Control: Stackelberg versus Cournot-Nash Equilibria

Stackelberg Beats Cournot: on Collusion and Efficiency in Experimental Markets*

We report on an experiment designed to compare Stackelberg and Cournot duopoly markets with quantity competition. We implement both a random matching and a fixed-pairs version for each market. Stackelberg markets yield, regardless of the matching scheme, higher outputs than Cournot markets and, thus, higher efficiency. For Cournot markets, we replicate a pattern known from previous experiments....

A Cournot-Stackelberg Model of Supply Contracts with Financial Hedging

We study the performance of a stylized supply chain where multiple retailers and a single producer compete in a Cournot-Stackelberg game. At time t = 0 the retailers order a single product from the producer and upon delivery at time T > 0, they sell it in the retail market at a stochastic clearance price. We assume the retailers’ profits depend in part on the realized path of some tradeable sto...

Comparative statics in Cournot free entry equilibrium

In this paper we study the effects of a change in an exogenous variable (the fixed cost or a parameter in the demand function) on the output and the number of active firms in a Symmetric Cournot Equilibrium with Free Entry (SCEFE). The results obtained here are different from those obtained in the Cournot model with a given number of firms. In particular, an increase in demand might yield a dec...