Comparison of Cournot Duopoly Model and Stackelberg Model
DOI:
https://doi.org/10.54097/njd24j34Keywords:
Game theory, Cournot duopoly model, Stackelberg model, oligopoly.Abstract
As a matter of fact, the game theory is a kind of mathematical study of economic interactions. The Cournot Duopoly Model and the Stackelberg Model are the two widely used concepts in the oligopoly market. Both are similar but different in firms’ order of making decisions. Firms in the Cournot Duopoly Model announce the quantity of production simultaneously, which is different from the Stackelberg Model where the leader makes decisions first then the follower responds to the leader’s plan. Therefore, the profits of firms are unequal in the two models. Firms in the Cournot Duopoly Model earn the same profits while the leader gains more advantage than the follower in the Stackelberg Model. This study aims to compare the two models and explain the difference between the two models is due to the order of announcing plans. It points out that the two models should consider the external factors that affect the outcome of models in future development.
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