Stackelberg-Nash-Cournot Equilibria: Characterizations and Computations

The supply side of an oligopolistic market supplying a homogeneous product noncooperatively is modeled. In this market, there is one leader and N followers. The followers operate under the Cournot assumption of zero conjectural variation and are accordingly called Cournot firms. The leader, called a...

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Bibliographic Details
Published in:Operations research 1983-03, Vol.31 (2), p.253-276
Main Authors: Sherali, Hanif D, Soyster, Allen L, Murphy, Frederic H
Format: Article
Language:English
Subjects:
131 Stackelberg leader-follower model
622 equilibrating fixed-points
Algorithms
Continuous functions
Demand curves
Market equilibrium
Mathematical functions
Mathematical models
Nash equilibrium
Objective functions
Oligopolies
Oligopoly
Operations research
Optimal solutions
Profit maximization
Supply
Uniqueness
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Summary:The supply side of an oligopolistic market supplying a homogeneous product noncooperatively is modeled. In this market, there is one leader and N followers. The followers operate under the Cournot assumption of zero conjectural variation and are accordingly called Cournot firms. The leader, called a Stackelberg firm, specifically takes into account the reaction of the Cournot firms to its output. For this situation, we study the behavior and implications of the joint Cournot reaction curve as generated by plausible economic market assumptions. In particular, we study the existence and uniqueness of a Stackelberg-Nash-Cournot equilibrium. In addition, we prescribe an efficient algorithm to determine a set of equilibrating output quantities for the firms.
ISSN:0030-364X
1526-5463
DOI:10.1287/opre.31.2.253