Stackelberg Versus Cournot Oligopoly with Private Information

Cumbul, Eray

doi:10.2139/ssrn.3199987

Cited by 5 publications

(12 citation statements)

References 46 publications

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“…As another remark, our result on consumer surplus is different from Cumbul (2021), in which all firms hold the same degree of signal precision and the Stackelberg competition consists of sequential output choices by

n + 1

firms. He shows that the consumer surplus in the Stackelberg competition is always lower than in the Cournot competition 10.…”

Section: Pre‐emptive Productioncontrasting

confidence: 84%

“…Nevertheless, Proposition 3 implies that the consumer surplus in our Stackelberg competition is larger than in the Cournot competition for sufficiently large

n

. The reason is that in the Stackelberg competition of Cumbul (2021), all except the last mover have to consider the signal revelation. As shown in Cumbul (2021, Corollary 1), since sequential decisions by

n + 1

firms lead to strategic complementarity between two consecutive firms, the first

n

firms hesitate to choose large amounts of output, which lowers consumer surplus.…”

Section: Pre‐emptive Productionmentioning

confidence: 89%

“…In contrast to the clear result on the producer surplus, the consumer surplus depends on the number of firms in the market. As Cumbul (2021) also investigates, by deriving the expected value of the consumer surplus

C S^{τ}

for each

τ = C, L

, we observe that the difference in the consumer surplus is characterized as follows.…”

Section: Pre‐emptive Productionmentioning

confidence: 95%

“…The reason is that in the Stackelberg competition of Cumbul (2021), all except the last mover have to consider the signal revelation. As shown in Cumbul (2021, Corollary 1), since sequential decisions by

n + 1

firms lead to strategic complementarity between two consecutive firms, the first

n

firms hesitate to choose large amounts of output, which lowers consumer surplus. In contrast, in our Stackelberg competition, because only a single firm (firm 0) cares about signal revelation, the

n

followers' aggressive reaction may yield a larger consumer surplus than the Cournot competition.…”

Section: Pre‐emptive Productionmentioning

confidence: 99%

“…Our study is related to the literature on Cournot and Stackelberg competition models with private information about demand uncertainty (Cumbul, 2021; Gal‐Or, 1987; Nakamura, 2015; Shinkai, 2000). 2 We contribute to the literature by investing new issues such as incentives to pre‐emptive production and producer and consumer surplus.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Pre‐emptive production and market competitiveness in oligopoly with private information

Amemiya

Ishihara

Nakamura

2020

Economics Manag Strategy

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We investigate a firm's pre‐emptive behavior by comparing Cournot competition and Stackelberg games with one leader and multiple followers, where each firm has access to private information on stochastic demand. We show that the firm prefers pre‐emptive quantity choice (Stackelberg leader) to simultaneous quantity choice (Cournot firm) if and only if the firm is ignorant of the market size compared to the other firm. The firm's decision in terms of production timing is always detrimental to producer surplus in the industry. It is beneficial to consumer surplus in duopoly competition, but detrimental when there are many competitors in the market.

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n + 1

firms. He shows that the consumer surplus in the Stackelberg competition is always lower than in the Cournot competition 10.…”

Section: Pre‐emptive Productioncontrasting

confidence: 84%

“…Nevertheless, Proposition 3 implies that the consumer surplus in our Stackelberg competition is larger than in the Cournot competition for sufficiently large

n

n + 1

firms lead to strategic complementarity between two consecutive firms, the first

n

firms hesitate to choose large amounts of output, which lowers consumer surplus.…”

Section: Pre‐emptive Productionmentioning

confidence: 89%

C S^{τ}

for each

τ = C, L

, we observe that the difference in the consumer surplus is characterized as follows.…”

Section: Pre‐emptive Productionmentioning

confidence: 95%

n + 1

firms lead to strategic complementarity between two consecutive firms, the first

n

firms hesitate to choose large amounts of output, which lowers consumer surplus. In contrast, in our Stackelberg competition, because only a single firm (firm 0) cares about signal revelation, the