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Endogenous Stackelberg leadership
Eric van Damme,Sjaak Hurkens +1 more
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In this paper, the authors consider a 2-stage game in which each player can either commit to a quantity in stage 1 or wait till stage 2, and they 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.Abstract:
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.read more
Citations
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Stackelberg Beats Cournot — On Collusion and Efficiency in Experimental Markets
TL;DR: In this article, the authors compare Stackelberg and Cournot duopoly markets with quantity competition, and find that both of them yield higher outputs than Cournot markets and, thus, higher efficiency.
Journal ArticleDOI
Second-Mover Advantage and Price Leadership in Bertrand Oligopoly
Rabah Amir,Anna Stepanova +1 more
TL;DR: It is shown that a firm with a sufficiently large cost lead over its rival has a first-mover advantage, and sequential play with the low-cost firm as leader in differentiated-product Bertrand duopoly with general demand and asymmetric linear costs.
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Real Options in an Asymmetric Duopoly: Who Benefits from Your Competitive Disadvantage?
Grzegorz Pawlina,Peter M. Kort +1 more
TL;DR: In this article, the authors consider the impact of uncertainty and investment cost asymmetry on the value and optimal real option exercise strategies of firms under imperfect competition and derive three types of equilibria.
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Competitive pricing decisions in a two-echelon supply chain with horizontal and vertical competition
TL;DR: In this paper, the authors investigated the pricing decisions in a non-cooperative supply chain that consists of two retailers and one common supplier, where the retailers order from the common supplier and compete in the same market.
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When should a manufacturer set its direct price and wholesale price in dual-channel supply chains?
Kenji Matsui,Kenji Matsui +1 more
TL;DR: The findings suggest that the manufacturer should post the direct price before or upon, but not after, setting the wholesale price for the retailer, which constitutes the subgame perfect Nash equilibrium of the noncooperative game between channel members.
References
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Book
The Strategy of Conflict
TL;DR: In this paper, the authors propose a theory of interdependent decision based on the Retarded Science of International Strategy (RSIS) for non-cooperative games and a solution concept for "noncooperative" games.
Book
A general theory of equilibrium selection in games
John C. Harsanyi,Reinhard Selten +1 more
TL;DR: Harsanyi and Selten as mentioned in this paper proposed rational criteria for selecting one particular uniformly perfect equilibrium point as the solution of any non-cooperative game, and applied this theory to a number of specific game classes, such as unanimity games, bargaining with transaction costs; trade involving one seller and several buyers; two-person bargaining with incomplete information on one side, and on both sides.
Journal ArticleDOI
Endogenous timing in duopoly games: Stackelberg or cournot equilibria
TL;DR: Simultaneous versus sequential play in an extended game is studied in this paper, where players decide whether to select actions in the basic game at the first opportunity or wait until observing their rivals' first period actions.
Journal ArticleDOI
Investment Strategy and Growth in a New Market
TL;DR: In this article, the authors study the strategic interaction among firms in a growing market and study the optimal levels of preemptive investment and the implications for the long-run structure of the market.
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