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Is the Leading Role Desirable?: A Simulation Analysis of the Stackelberg Behavior in World Petroleum Market

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  • Zili Yang

Abstract

This article explores extraction profiles in the Stackelberg equilibrium of exhaustible resource industry. Calibrated with real data of world petroleum market, the Stackelberg and Cournot–Nash equilibriums are solved numerically. The properties of the Stackelberg equilibrium are compared and contrasted with the benchmark open-loop Cournot–Nash equilibrium. Simulation results indicate that the leader’s gains are limited in the Stackelberg strategic setting. Methodologically, this article pioneers solving the Stackelberg game numerically in a dynamic and empirical model. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Zili Yang, 2013. "Is the Leading Role Desirable?: A Simulation Analysis of the Stackelberg Behavior in World Petroleum Market," Computational Economics, Springer;Society for Computational Economics, vol. 42(1), pages 133-150, June.
    • Handle: RePEc:kap:compec:v:42:y:2013:i:1:p:133-150
    DOI: 10.1007/s10614-012-9335-x
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    References listed on IDEAS

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    Cited by:

    1. Okullo, Samuel J. & Reynès, Frédéric, 2016. "Imperfect cartelization in OPEC," Energy Economics, Elsevier, vol. 60(C), pages 333-344.

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    More about this item

    Keywords

    The Stackelberg equilibrium; The Cournot–Nashequilibrium; Extraction profiles of exhaustible resources; Economic dynamics; Game theoretic modeling; Numerical simulations; C61; C72; D43; L13; Q41;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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