TITLE:
Stackelberg-Cournot and Cournot Equilibria in a Mixed Markets Exchange Economy
AUTHORS:
Ludovic A. Julien
KEYWORDS:
Stackelberg-Cournot Equilibrium; Conjectural Variations; Preferences
JOURNAL NAME:
Theoretical Economics Letters,
Vol.2 No.3,
August
2,
2012
ABSTRACT: In this note, we compare two strategic general equilibrium concepts: the Stackelberg-Cournot equilibrium and the Cournot equilibrium. We thus consider a market exchange economy including atoms and a continuum of traders, who behave strategically. We show that, when the preferences of the small traders are represented by Cobb-Douglas utility functions and the atoms have the same utility functions and endowments, the Stackelberg-Cournot and the Cournot equilibrium equilibria coincide if and only if the followers’ best responses functions have a zero slope at the SCE.