Endogenous sequencing of firm decisions. (English) Zbl 0793.90016

Mailath, George J.

J. Econ. Theory 59, No. 1, 169-182 (1993).

Summary: When firms are symmetrically informed, a Stackelberg leader prefers to be leader rather than a Cournot duopolist. However, when the leader has superior information about demand, the leader may earn lower ex ante profits than it would earn if it was choosing quantities simultaneously with the follower. In this paper I give the firm with superior information the option of delaying its quantity decision until the decision period of the less informed firm (so that decisions are made simultaneously). Surprisingly, in the unique stable outcome, the informed firm moves first, regardless of its private information.

MSC:

91B26	Auctions, bargaining, bidding and selling, and other market models
91A65	Hierarchical games (including Stackelberg games)
91B44	Economics of information

Keywords:

Stackelberg leader; Cournot duopolist; less informed firm; private information