Stackelberg and Cournot competition under equilibrium limit pricing

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 ...

Cournot Competition under Uncertainty∗

We analyze Cournot competition under demand uncertainty. We show that under rather general assumptions, the game has no asymmetric equilibria but multiple symmetric equilibria. Multiplicity is caused by the requirement of nonnegative prices and remains an issue also for simple demand specifications, such as the linear case. We then show that uniqueness of equilibrium is guaranteed if uncertaint...

Welfare losses under Cournot competition

In a market for a homogeneous good where firms are identical, compete in quantities and produce with constant returns, the percentage of welfare losses (PWL) is small with as few as five competitors for a class of demand functions which includes linear and isoelastic cases. We study markets with positive fixed costs and asymmetric firms. We provide exact formulae of PWL and robust constructions...

A Unilateral Pricing Policy and the Stackelberg Equilibrium

Cooper (1986) examined the equilibrium of the retroactive most-favored-customer pricing policy by using a two-period duopoly model. He showed that the most-favoredcustomer policy enables both firms to offer higher prices and to enjoy higher profits. Neilson and Winter (1992) showed that even if one firm in a price-setting duopoly adopts the most-favored-customer policy, the equilibrium does not...

R&D subsidies under asymmetric Cournot competition