This document provides an overview of the Stackelberg duopoly model. It explains that the model involves two firms, one that acts as a leader by choosing its quantity first, and the other that acts as a follower by observing the leader's choice and then choosing its own quantity. The leader aims to maximize its profits by determining the follower's reaction curve and incorporating it into its decision-making. This allows the leader to produce a higher quantity and obtain greater profits than what would result under Cournot competition. If both firms try to act as leaders, it can lead to instability through a price war or collusion.
This theory relies on the market behaviour of the consumer to know about his preferences with regard to the various combinations for the two reactions and responses of the consumer.
Models of Oligopoly
Cournot’s duopoly model
Sweezy’s kinked demand curve model
Price leadership models
Collusive models :The Cartel Arrangement
The Game Theory
Prisoner’s Dilemma
Price leadership Model
Collusive models The Cartel Arrangement
FellowBuddy.com is an innovative platform that brings students together to share notes, exam papers, study guides, project reports and presentation for upcoming exams.
We connect Students who have an understanding of course material with Students who need help.
Benefits:-
# Students can catch up on notes they missed because of an absence.
# Underachievers can find peer developed notes that break down lecture and study material in a way that they can understand
# Students can earn better grades, save time and study effectively
Our Vision & Mission – Simplifying Students Life
Our Belief – “The great breakthrough in your life comes when you realize it, that you can learn anything you need to learn; to accomplish any goal that you have set for yourself. This means there are no limits on what you can be, have or do.”
Like Us - https://www.facebook.com/FellowBuddycom
Neo classical general equilibrium theory which is based on Walrasian theory of general equilibrium 2*2*2 model and Marshallian graphical representation
This theory relies on the market behaviour of the consumer to know about his preferences with regard to the various combinations for the two reactions and responses of the consumer.
Models of Oligopoly
Cournot’s duopoly model
Sweezy’s kinked demand curve model
Price leadership models
Collusive models :The Cartel Arrangement
The Game Theory
Prisoner’s Dilemma
Price leadership Model
Collusive models The Cartel Arrangement
FellowBuddy.com is an innovative platform that brings students together to share notes, exam papers, study guides, project reports and presentation for upcoming exams.
We connect Students who have an understanding of course material with Students who need help.
Benefits:-
# Students can catch up on notes they missed because of an absence.
# Underachievers can find peer developed notes that break down lecture and study material in a way that they can understand
# Students can earn better grades, save time and study effectively
Our Vision & Mission – Simplifying Students Life
Our Belief – “The great breakthrough in your life comes when you realize it, that you can learn anything you need to learn; to accomplish any goal that you have set for yourself. This means there are no limits on what you can be, have or do.”
Like Us - https://www.facebook.com/FellowBuddycom
Neo classical general equilibrium theory which is based on Walrasian theory of general equilibrium 2*2*2 model and Marshallian graphical representation
Stackelberg's Game in Moser Baer -Cost Estimation - Mathematics for business ...MayankAgrawal205
A brief mathematical centric report on Stackelberg's Game in Moser Baer - Cost Estimation. Discussion on market types and Supply chain with respect to Estimation of Demand and Supply and using graphs for predictive analysis.
Oligopoly content slideshow. Designed for the Economic A level qualification. Can be used in revision and in class.
Subtopics:
Intro to Oligopoly
Non-Cooperative Strategy I: The Kinked Demand Curve Model
Non-Cooperative Strategy II: Game Theory
Cooperative Strategy: Collusion & Cartels
Non-price Competition
The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
For more information, visit-www.vavaclasses.com
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
In this webinar you will learn how your organization can access TechSoup's wide variety of product discount and donation programs. From hardware to software, we'll give you a tour of the tools available to help your nonprofit with productivity, collaboration, financial management, donor tracking, security, and more.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
3. STACKELBERG DUOPOLY
MODEL
Strategic Game
Developed by German Economist Heinrich
Von Stackelberg in 1934
Extension of Curnot model
There are two firms, which sell homogenous
products
It is a sequential game not simultaneous
4. One firm is Leader and another is follower
The leader firm moves first and the follower firm
move sequentially
Leader firm chooses the quantity first, and the
follower observes the leader’s quantity and then
chooses it’s profit
Once the two quantities are chosen ,price is set
to clear the market
Contd…
5. Contd…
By Stackelberg assumption, the duopolist
recognize that his competitor acts on the Curnot
assumption
It allows the sophisticated duopolist to
determine the reaction curve of his rival and
incorporate it in his own profit function
Then he proceeds to maximise like
a monopolist.
7. FIGURE EXPLANATION
If firm A is the sophisticated oligopolist, it’s rival will act
on the basis of it’s own reaction curve
A chooses his output at the level which maximises his
profit
It lies on the lowest possible isoprofit curve of A,
denoting the maximum profit with B’s reaction curve
Firm A, produce XA, firm B will react by producing XB
The sophisticated oligopolist becomes leader, the rival
firm becomes the follower because firm A reaches an
isoprofit curve closer to his axis
8. Cntd…
The naive follower is worse off as compared with
curnot equilibrium, the level of output he reaches an
isoprofit curve further away from his axis.
If firm B is the sophisticated firm, it will choose to
produce XB’, corresponding to point B on A’s reaction
curve
Firm B will the leader and firm A becomes the follower
B has a higher profit and firm A has a lower profit as
compared with the curnot equilibrium
9. STACKELBERG DISEQUILIBRIUM
If both firm are sophisticated, then both will want to
act as leaders
It yields a greater profit to them but market situation
becomes unstable
This situation known as Stackelberg Disequilibrium
The effect will either be a price war until one of the
firm surrenders and agree to act as follower, or a
collusion is reached.
10. Both firm abandoning their naive reaction function
and
Moving to a point closer to the Edgeworth Contract
curve with both of them attaining higher profits
Contd…
11. Conclusion
Stackelberg model is a sequential game, not
simultaneous like cournot’s game
In stackelberg duopolies the quantity sold by
the leader is greater than the quantity sold by
the follower, while in curnot duopolies
quantity is same for both firms.