Technical Report: DCC-2015-01

Note on the Cournot and Stackelberg Competitions: is it worth to be the last playing?

Margarida Carvalho, João Pedro Pedroso

INESC TEC and Faculdade de Ciências da Universidade do Porto,
September 2015


In this brief note, a competition on a new product produced by two firms sharing a market is analyzed both from a Cournot and Stackelberg point of view. In contrast with classical models, setup costs are considered in the firms’ production costs, leading to ambiguities in their best response strategies. Our aim is to establish the different equilibria strategies that may arise from these two competition versions. Moreover, our goal is to open the discussion of whether it might be worth for a player to wait for the opponents to move, forcing a Stackelberg equilibrium to be played.