IDEAS home Printed from https://ideas.repec.org/a/eej/eeconj/v18y1992i2p171-186.html
   My bibliography  Save this article

The History of the Static Equilibrium Dominant Firm Price Leadership Model

Author

Listed:
  • Christoph Schenzler

    (Vanderbilt University)

  • John J. Siegfried

    (Vanderbilt University)

  • William O. Thweatt

    (Vanderbilt University)

Abstract

The static equilibrium dominant firm price leadership model is traced to a seminar presentation by Karl Forchheimer in 1906, who seems to have originated the concept of a dominant firm facing competition from fringe rivals maximizing profits on the basis of residual demand--industry demand less quantity supplied by the fringe. Heinrich von Stackelberg completed the model analytically in 1934, although in a duopoly context absent stable equilibrium. George Stigler finally combined von Stackelberg's comparative statics with Forchheimer's price-taking fringe rivals, to articulate (in 1940) the equilibrium model as it has been used in countless intermediate microeconomics texts and classrooms for the half century since.

Suggested Citation

  • Christoph Schenzler & John J. Siegfried & William O. Thweatt, 1992. "The History of the Static Equilibrium Dominant Firm Price Leadership Model," Eastern Economic Journal, Eastern Economic Association, vol. 18(2), pages 171-186, Spring.
    • Handle: RePEc:eej:eeconj:v:18:y:1992:i:2:p:171-186
    as

    Download full text from publisher

    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume18/V18N2P171_186.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gaskins, Darius Jr., 1971. "Dynamic limit pricing: Optimal pricing under threat of entry," Journal of Economic Theory, Elsevier, vol. 3(3), pages 306-322, September.
    2. Gavin C. Reid, 1979. "Forchheimer on Partial Monopoly," History of Political Economy, Duke University Press, vol. 11(2), pages 303-308, Summer.
    3. Valerie Y. Suslow, 1986. "Estimating Monopoly Behavior with Competitive Recycling: An Application to Alcoa," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 389-403, Autumn.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Colucci, Domenico & Doni, Nicola & Ricchiuti, Giorgio & Valori, Vincenzo, 2022. "Market dynamics with a state-owned dominant firm and a competitive fringe," Chaos, Solitons & Fractals, Elsevier, vol. 161(C).
    2. Hellmann, Thomas & Thiele, Veikko, 2022. "May the force be with you: Investor power and company valuations," Journal of Corporate Finance, Elsevier, vol. 72(C).
    3. Manel Antelo & Lluís Bru, 2024. "Intrapersonal price discrimination and welfare in a dominant firm model," Journal of Economics, Springer, vol. 141(2), pages 163-188, March.
    4. Nicola Giocoli, 2012. "Who Invented the Lerner Index? Luigi Amoroso, the Dominant Firm Model, and the Measurement of Market Power," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 41(3), pages 181-191, November.
    5. Siegfried, John J. & Latta, Christopher, 1998. "Competition in the Retail College Textbook Market," Economics of Education Review, Elsevier, vol. 17(1), pages 105-115, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Palmer, Karen & Sigman, Hilary & Walls, Margaret, 1997. "The Cost of Reducing Municipal Solid Waste," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 128-150, June.
    2. Flavio Toxvaerd, 2017. "Dynamic limit pricing," RAND Journal of Economics, RAND Corporation, vol. 48(1), pages 281-306, March.
    3. Stephen W. Salant, 1977. "Staving off the backstop: dynamic limit-pricing with a kinked demand curve," International Finance Discussion Papers 110, Board of Governors of the Federal Reserve System (U.S.).
    4. De Beir, Jean & Fodha, Mouez & Magris, Francesco, 2010. "Life Cycle Of Products And Cycles," Macroeconomic Dynamics, Cambridge University Press, vol. 14(2), pages 212-230, April.
    5. Boyd, Roy G. & Jung, Chulho & Seldon, Barry J., 1995. "The market structure of the US aluminum industry," Journal of Economics and Business, Elsevier, vol. 47(3), pages 293-301, August.
    6. repec:kap:iaecre:v:15:y:2009:i:4:p:421-436 is not listed on IDEAS
    7. David G. Blanchflower & Neil Millward & Andrew J. Oswald, 1989. "Unionization and Employment Behavior," NBER Working Papers 3180, National Bureau of Economic Research, Inc.
    8. Ryo Sakamoto & Kyle Stiegert, 2018. "Comparing competitive toughness to benchmark outcomes in retail oligopoly pricing," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 44-60, December.
    9. Jean Jaskold Gabszewicz, 1979. "Théories de la concurrence imparfaite : illustrations récentes de thèmes anciens," Working Papers hal-01527449, HAL.
    10. Mehmet E. Karaaslan, 1995. "Identifying Participants in a Price-fixing Conspiracy: Output and Market Share Tests Reexamined," Law and Economics 9503001, University Library of Munich, Germany.
    11. Marcel Boyer & Rachidi Kotchoni, 2011. "The Econometrics of Cartel Overcharges," Working Papers hal-00631429, HAL.
    12. Gautam Gowrisankaran & Thomas J. Holmes, 2000. "Do mergers lead to monopoly in the long run? Results from the dominant firm model," Staff Report 264, Federal Reserve Bank of Minneapolis.
    13. Semmler, Willi & Di Bartolomeo, Giovanni & Minooei Fard, Behnaz & Braga, Joao Paulo, 2022. "Limit pricing and entry game of renewable energy firms into the energy sector," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 179-190.
    14. Schankerman, Mark & Pakes, Ariel, 1986. "Estimates of the Value of Patent Rights in European Countries during the Post-1950 Period," Economic Journal, Royal Economic Society, vol. 96(384), pages 1052-1076, December.
    15. Du, Hang & Wei, Lai & Zhu, Qinghua, 2023. "Competition of consumables’ original brand manufacturers and remanufacturers considering the entry of compatible manufacturers," European Journal of Operational Research, Elsevier, vol. 306(2), pages 679-692.
    16. Qi Wang & Huazhong Zhao & Jinhong Xie, 2016. "Intra-Standard Competition: The Joint Impact of an Installed-User Base and a Supporting-Firm Base in Markets with Network Effects," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 3(3), pages 159-174, December.
    17. Sawyer, Malcolm C., 1982. "On the specification of structure-performance relationships," European Economic Review, Elsevier, vol. 17(3), pages 295-306.
    18. Price, Gregory N., 1995. "The determinants of entry for black-owned commercial banks," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(3), pages 289-303.
    19. William E. Kovacic & Carl Shapiro, 2000. "Antitrust Policy: A Century of Economic and Legal Thinking," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 43-60, Winter.
    20. Milde, Hellmuth, 1980. "Potentielle Konkurrenz, Marktzutritt und Limitpreisbildung," Discussion Papers, Series I 150, University of Konstanz, Department of Economics.
    21. Golombek, Rolf & Irarrazabal, Alfonso A. & Ma, Lin, 2018. "OPEC's market power: An empirical dominant firm model for the oil market," Energy Economics, Elsevier, vol. 70(C), pages 98-115.

    More about this item

    Keywords

    Competition; Duopoly; Equilibrium; Price Leadership;
    All these keywords.

    JEL classification:

    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eej:eeconj:v:18:y:1992:i:2:p:171-186. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Victor Matheson, College of the Holy Cross (email available below). General contact details of provider: https://edirc.repec.org/data/eeaa1ea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.