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The Non‐Robustness of the Nash‐Stackelberg‐Hybrid Equilibrium
Author(s) -
Prentice David,
Sibly Hugh
Publication year - 1998
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/1467-8454.00028
Subject(s) - stackelberg competition , robustness (evolution) , duopoly , nash equilibrium , economics , microeconomics , mathematical economics , epsilon equilibrium , mathematical optimization , best response , mathematics , chemistry , biochemistry , cournot competition , gene
In a simple, standard sequential search model, the Nash‐Stackelberg‐Hybrid equilibrium is shown, in general, to be non‐robust when the assumption that all firms are constrained to operate one outlet is dropped. Unless the firms are constrained from increasing the number of outlets or the price, they will open additional outlets to increase their market power. In a standard duopoly model an equilibrium featuring both firms operating multiple outlets is shown to exist.