STACKELBERG VERSUS COURNOT OLIGOPOLY EQUILIBRIUM

We compare an m-firm Cournot model with a hierarchical Stackelberg model where m firms choose outputs sequentially. The Stackelberg equilibrium price is lower, so output and total surplus are higher; total profits are lower. While the first mover in a Stackelberg duopoly earns more than a Cournot duopolist, this is not necessarily true for m > 2. We find a surprisingly simple relation which determines whether Cournot profit exceeds the Stackelberg leader's. Finally we consider a game (with firms choosing whether to reveal their outputs) which includes Stackelberg and Cournot as possible outcomes: the equilibrium is Stackelberg.