Dynamic Oligopoly à la Stackelberg with Stochastic Capital Accumulation

Lambertini, Luca (2005) Dynamic Oligopoly à la Stackelberg with Stochastic Capital Accumulation. Bologna: Dipartimento di Scienze economiche DSE, p. 21. DOI 10.6092/unibo/amsacta/4742. In: Quaderni - Working Paper DSE (547). ISSN 2282-6483.
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Abstract

I investigate a dynamic oligopoly game where firms enter simultaneously but compete hierarchically `a la Stackelberg at each instant over time. They accumulate capacity through costly investment, with capital acumulation dynamics being affected by an additive shock the mean and variance of which are known. The main findings are the following. First, the Stackelberg game is uncontrollable by the leader; hence, it is time consistent. Second, the leaders invest more than the followers; as a result, in steady state, the leaders’ capacity and profits are larger than the followers’. Therefore, the present analysis does not confirm Gibrat’s Law, since the individual growth rate is determined by the timing of moves.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Keywords
differential games, time consistency, investment, optimal control methods, Stackelberg equilibrium
Subjects
ISSN
2282-6483
DOI
Deposit date
01 Apr 2016 09:30
Last modified
01 Apr 2016 09:33
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