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A Two-Stage Cournot Duopoly with Inventory Costs

A Two-Stage Cournot Duopoly with Inventory Costs Abstract This paper analyses the Cournot duopoly model which has two production periods before the market clears. As shown by Saloner (1987), if inventory costs are zero, many outcomes including both Cournot and Stackelberg outcomes are subgame perfect equilibrium outcomes. However, if small inventory costs are introduced, the Cournot outcome is no longer found in equilibrium and the equilibrium outcomes are only of Stackelberg-type. This suggests that more attention should be paid to the Stackelberg model than to the Cournot model. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Japanese Economic Review Springer Journals

A Two-Stage Cournot Duopoly with Inventory Costs

Matsumura, Toshihiro
The Japanese Economic Review , Volume 48 (1): 9 – Mar 1, 1997
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References (15)

Publisher
Springer Journals
Copyright
1997 Japanese Economic Association
ISSN
1352-4739
eISSN
1468-5876
DOI
10.1111/1468-5876.00037
Publisher site
See Article on Publisher Site

Abstract

Abstract This paper analyses the Cournot duopoly model which has two production periods before the market clears. As shown by Saloner (1987), if inventory costs are zero, many outcomes including both Cournot and Stackelberg outcomes are subgame perfect equilibrium outcomes. However, if small inventory costs are introduced, the Cournot outcome is no longer found in equilibrium and the equilibrium outcomes are only of Stackelberg-type. This suggests that more attention should be paid to the Stackelberg model than to the Cournot model.

Journal

The Japanese Economic Review – Springer Journals

Published: Mar 1, 1997

Keywords: economics, general; microeconomics; macroeconomics/monetary economics//financial economics; econometrics; development economics; economic history

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