On the effects of an industry-wide cost change in a Stackelberg duopoly

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Consider a homogeneous Stackelberg leader-follower duopoly with quantity competition, in which both firms face the same industry-wide marginal costs. This paper investigates the comparative static effects of a change in these marginal costs. We show that an increase of the costs will lead to a decrease of the total market output. However, it turns out that the output of the leader firm might increase. We present conditions under which the latter counterintuitive effect occurs.

Originele taal-2English
Pagina's (van-tot)592-598
Aantal pagina's7
TijdschriftJahrbucher fur nationalokonomie und statistik
Nummer van het tijdschrift5
StatusPublished - sep.-2000

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