Answer to Question #108995 in Microeconomics for Esmat Asem

Question

Can the leader ever get a lower profit in a Stackelberg equilibrium than he would get in the Cournot equilibrium?

Answer 1

The Stackelberg equilibrium price is lower, so output and total surplus are higher; total profits are lower. While the first mover in a Stackelberg duopoly earns more than a Cournot duopolist, this is not necessarily true for number of moves m > 2.