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Leaders and competitors

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  • Susumu Cato
  • Ryoko Oki

Abstract

The purpose of this article is to investigate the properties of equilibrium in a market with a leader. In particular, we examine how the equilibrium values depend on existing competitors. When the number of competitors is exogenously given, most equilibrium values, including the leader’s strategies, depend on the structure of the competitors: the number of incumbent competitors, their technologies, and their objective functions. In contrast, when an entry is endogenous, the equilibrium values, including not only the leader’s strategies but the entrants’ as well, are independent of such properties of the incumbent competitors. We provide several applications of our main result in industrial organization issues. Copyright Springer-Verlag 2012

Suggested Citation

  • Susumu Cato & Ryoko Oki, 2012. "Leaders and competitors," Journal of Economics, Springer, vol. 107(3), pages 239-255, November.
    • Handle: RePEc:kap:jeczfn:v:107:y:2012:i:3:p:239-255
    DOI: 10.1007/s00712-012-0271-y
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    References listed on IDEAS

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    Cited by:

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    2. Angela C. Chao & Jen-yao Lee & Leonard F.S. Wang, 2017. "Stackelberg Competition, Innovation and Social Efficiency of Entry," Manchester School, University of Manchester, vol. 85(1), pages 1-12, January.
    3. Hiroaki Ino & Akira Miyaoka, 2016. "Government-induced Production Commitment in the Open Economy," Discussion Paper Series 142, School of Economics, Kwansei Gakuin University, revised May 2016.

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    More about this item

    Keywords

    Leadership; Endogenous entry; Strategic commitment; Incumbent competitor; L11; L13; L16;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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