Cournot and Stackelberg equilibrium under strategic delegation: an equivalence result

This paper uses the theory of strategic delegation to derive an equivalence between the models of simultaneous and sequential quantity competition in oligopoly. It shows that Cournot and Stackelberg equilibria under managerial delegation are identical provided delegation is sequential under the firs...

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Bibliographic Details
Published in:Theory and decision 2016-11, Vol.81 (4), p.553-570
Main Author: Stamatopoulos, Giorgos
Format: Article
Language:English
Subjects:
Behavioral/Experimental Economics
Competition
Decision theory
Delegation
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Equilibrium
Equivalence
Finance
Game Theory
Games
Industrial economics
Insurance
Management
Managers
Market equilibrium
Oligopoly
Operations Research/Decision Theory
Prices
Social and Behav. Sciences
Statistics for Business
Studies
Theory
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Summary:This paper uses the theory of strategic delegation to derive an equivalence between the models of simultaneous and sequential quantity competition in oligopoly. It shows that Cournot and Stackelberg equilibria under managerial delegation are identical provided delegation is sequential under the first framework and simultaneous under the second. Furthermore, the first (second) mover in the game under sequential delegation earns the same profit as the second (first) mover in the game under sequential quantity competition.
ISSN:0040-5833
1573-7187
DOI:10.1007/s11238-016-9548-x