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Athanasia Mavrommati
''A stackelberg duopoly with binary choices of objectives''
( 2012, Vol. 32 No.1 )
This paper analyzes a Stackelberg model where firms choose their objective functions (profit or revenue) in order to achieve maximum payoff. The objective of the present work is to demonstrate that depending on the unit cost of production, firms make either asymmetric choices of objectives (low values of the unit cost) or symmetric choices (high values of the unit cost). As a result of these choices, the payoff advantage alternates between the first and the second mover in the market.
Keywords: endogenous objectives, revenue objective, profit objective, first-mover advantage, second-mover advantage.
JEL: D4 - Market Structure and Pricing: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Apr 16 2011 Manuscript Accepted : Mar 10 2012

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