This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Stackelberg equilibrium, the leaders gets a larger market share and earns a much larger profit than the follower. Additionally, this outcome occurs even though firm 2 has full information regarding the output choice of q1 In Stackelberg, we derive firm 1s output choice as the profit-maximizing output when firm 1 correctly anticipates that firm 2s decision rule is to choose its best value of q2 conditional upon the output choice already made by firm 1. 11.2 Sequential Price Competition If firms are identical in MC, then the outcome of sequential price setting games is the same as simultaneous price game Prices fall to Marginal Cost....
View Full Document
This note was uploaded on 02/23/2012 for the course ECON 445 taught by Professor Mcmanus during the Summer '08 term at UNC.
- Summer '08