Stackelberg competition

About: Stackelberg competition is a research topic. Over the lifetime, 6611 publications have been published within this topic receiving 109213 citations.

On the advantage of quantity leadership when outsourcing production to a competitive contract manufacturer

Abstract: This study investigates a supply chain comprising an original equipment manufacturer (OEM) and a contract manufacturer (CM), in which the CM acts as both upstream partner and downstream competitor to the OEM. The two parties can engage in one of three Cournot competition games: a simultaneous game, a sequential game with the OEM as the Stackelberg leader, and a sequential game with the CM as the Stackelberg leader. On the basis of these three basic games, this study investigates the two parties' Stackelberg leadership/followership decisions. When the outsourcing quantity and wholesale price are exogenously given, either party may prefer Stackelberg leadership or followership. For example, when the wholesale price or the proportion of production outsourced to the CM is lower than a threshold value, both parties prefer Stackelberg leadership and, consequently, play a simultaneous game in the consumer market. When the outsourcing quantity and wholesale price are decision variables, the competitive CM sets a wholesale price sufficiently low to allow both parties to coexist in the market, and the OEM outsources its entire production to this CM. This study also examines the impact of the supply chain parties' bargaining power on contract outcomes by considering a wholesale price that is determined via the generalized Nash bargaining scheme, finding a Stackelberg equilibrium to be sustained when the CM's degree of bargaining power is great and the non-competitive CM's wholesale price is high.

Vertical Integration of Successive Oligopolists

Abstract: Vertical integration of successive monopolists (with fixed production coefficients) has long been known to provide merging monopolists with greater profit and their customers with greater outputs at lower prices. We contended in our earlier papers that similar welfare attributes apply to mergers between monopolist input suppliers and Cournot-type oligopolists.1 But what is the result when the input supplier is also an oligopolist? The present paper answers this question. It demonstrates, in particular, that when vertical integration of successive oligopolists is mutually profitable, industry output increases and product price is lowered. The welfare gain stemming from vertical integration is further shown to hold not only under Cournot oligopoly but a Stackelberg "leader-follower" type of oligopoly. I. Independent Upstream-Downstream Oligopolists

A Stochastic Multiple-Leader Stackelberg Model: Analysis, Computation, and Application

Abstract: We study an oligopoly consisting of M leaders and N followers that supply a homogeneous product (or service) noncooperatively. Leaders choose their supply levels first, knowing the demand function only in distribution. Followers make their decisions after observing the leader supply levels and the realized demand function. We term the resulting equilibrium a stochastic multiple-leader Stackelberg-Nash-Cournot (SMS) equilibrium. We show the existence and uniqueness of SMS equilibrium under mild assumptions. We also propose a computational approach to find the equilibrium based on the sample average approximation method and analyze its rate of convergence. Finally, we apply this framework to model competition in the telecommunication industry.

TRUSTS: Scheduling randomized patrols for fare inspection in transit systems using game theory

Abstract: In proof-of-payment transit systems, passengers are legally required to purchase tickets before entering but are not physically forced to do so. Instead, patrol units move about the transit system, inspecting the tickets of passengers, who face fines if caught fare evading. The deterrence of fare evasion depends on the unpredictability and effectiveness of the patrols. In this paper, we present TRUSTS, an application for scheduling randomized patrols for fare inspection in transit systems. TRUSTS models the problem of computing patrol strategies as a leader-follower Stackelberg game where the objective is to deter fare evasion and hence maximize revenue. This problem differs from previously studied Stackelberg settings in that the leader strategies must satisfy massive temporal and spatial constraints; moreover, unlike in these counterterrorism-motivated Stackelberg applications, a large fraction of the ridership might realistically consider fare evasion, and so the number of followers is potentially huge. A third key novelty in our work is deliberate simplification of leader strategies to make patrols easier to be executed. We present an efficient algorithm for computing such patrol strategies and present experimental results using real-world ridership data from the Los Angeles Metro Rail system. The Los Angeles County Sheriff’s department is currently carrying out trials of TRUSTS.

Game theory and transportation systems modelling

Abstract: In this paper, correspondences are drawn between two game theory models (Nash noncooperative and Stackelberg games) and some problems in transportation systems modelling. An example of each is described in detail, namely the problem of carriers competing for intercity passenger travel and the signal optimization problem. The discussion serves to underline differences between two categories of transportation problems and introduces the game theory literature as a potential source of solution algorithms. Also it is shown that inner-outer iterative techniques for Stackelberg type problems cannot be expected to converge to the solution, and an approximate formulation of these problems is introduced which appears to be more readily solvable.