Stackelberg Leadership with Demand Uncertainty in a Differentiated Duopoly

Fernanda Ferreira, Flávio Ferreira, and A. Pinto (Portugal)


Optimization, stochastic control, Nash equilibrium, Stack elberg, duopoly, differentiation.


On a symmetric differentiated Stackelberg duopoly model in which there is asymmetric demand information owned by leading and follower firms, we show that the leading firm does not necessarily have advantage over the follow ing one. The reason for this is that the second mover can adjust its output level after observing the realized demand, while the first mover chooses its output level only with the knowledge of demand distribution.

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