Asked by Alexsis Oltsher on May 14, 2024
Verified
What is one difference between the Cournot and Stackelberg models?
A) In Cournot, both firms make output decisions simultaneously, and in Stackelberg, one firm sets its output level first.
B) In Stackelberg, both firms make output decisions simultaneously, and in Cournot, one firm sets its output level first.
C) In Cournot, a firm has the opportunity to react to its rival.
D) Profits are zero in Cournot and positive in Stackelberg.
Cournot Model
An economic model used to describe an industry structure in which companies compete on the quantity of output they will produce, assuming that their competitor's decisions are fixed.
Stackelberg Model
An economic model of strategic interaction in oligopolistic markets where one firm (the leader) sets its output first and then other firms (followers) set their outputs sequentially.
- Implement the Stackelberg framework to comprehend the strategic benefits in consecutive decision-making processes.
Verified Answer
KK
Kalaivani KumarMay 19, 2024
Final Answer :
A
Explanation :
In the Cournot model, both firms make output decisions simultaneously, while in the Stackelberg model, one firm sets its output level first and the other firm reacts to it.
Learning Objectives
- Implement the Stackelberg framework to comprehend the strategic benefits in consecutive decision-making processes.