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On the Effects of an Industry-wide Cost Change in a Stackelberg Duopoly / Die Effekte einer industrieweiten Kostenveränderung im Stackelberg Duopol

Author

Listed:
  • Toolsema Linda A.

    (Department of Economics, University of Groningen, P.O. Box 800, NL-9700 AV Groningen, The Netherlands)

  • Schoonbeek Lambert

    (Department of Economics, University of Groningen, P.O. Box 800, NL-9700 AV Groningen, The Netherlands)

Abstract

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.

Suggested Citation

  • Toolsema Linda A. & Schoonbeek Lambert, 2000. "On the Effects of an Industry-wide Cost Change in a Stackelberg Duopoly / Die Effekte einer industrieweiten Kostenveränderung im Stackelberg Duopol," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(5), pages 592-598, October.
    • Handle: RePEc:jns:jbstat:v:220:y:2000:i:5:p:592-598
    DOI: 10.1515/jbnst-2000-0507
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    References listed on IDEAS

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    7. Caputo, Michael R., 1996. "The Envelope Theorem and Comparative Statics of Nash Equilibria," Games and Economic Behavior, Elsevier, vol. 13(2), pages 201-224, April.
    8. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
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