An economic theory of leader choice in Stackelberg models
Abstract
States that the Stackelberg leadership model is rarely used to describe market price determination perhaps because of the lack of a theoretical basis for selecting the minimum size necessary for leadership. Provides structural sufficiency conditions for selecting a unique Stackelberg leader based on the concept of Pareto dominance, in which the structural criterion involves the relative capacity shares of the first and second largest market rivals. Suggests that the Stackelberg price game is a viable static equilibrium construct even though the fringe firms are not atomistic. Applies the Stackelberg model to antitrust merger analysis.
Keywords
Citation
Higgins, R.S. (1996), "An economic theory of leader choice in Stackelberg models", Journal of Economic Studies, Vol. 23 No. 5/6, pp. 79-95. https://doi.org/10.1108/01443589610154072
Publisher
:MCB UP Ltd
Copyright © 1996, MCB UP Limited