Managerial Incentives and Stackelberg Equilibria in Oligopoly

Speaker:  Marcella Scrimitore - Universita' del Salento
  Monday, January 18, 2010 at 12:30 PM Bibloteca DSE - Palazzina 32, ex Caserma Passalacqua
Abstract. The paper investigates both quantity and price oligopoly games in markets
with a variable number of managerial and entepreneurial firms which
defines market structure. Starting from Vickers (Economic Journal 1985)
and Basu (Economics Letters, 1995) which establish an equivalence between
Stackelberg quantity leadership and the managerial character of a firm,
the equilibrium outcomes of these games are compared to those generated in
sequential games by the interactions between multi-leaders and
multi-followers. The profitability of a managerial/entepreneurial attitude
vs leadership/followership is shown to critically depend upon the kind of
strategy, price or quantity, and upon the assumed market structure. Indeed
the latter turns out to be crucial in determining the equivalence result
that is shown to be contingent on the assumption that just one leader or
one managerial firm operate in the market. The welfare analysis finally
shows significant differences between the multi-manager and the
multi-leader games, highlighting the different role of market structure
and imperfect substitutability on the outcomes of the two games.

 


Programme Director
Angelo Zago

Publication date
January 9, 2010

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