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HOW MANY FIRMS SHOULD BE LEADERS? BENEFICIAL CONCENTRATION REVISITED *
Author(s) -
Ino Hiroaki,
Matsumura Toshihiro
Publication year - 2012
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2012.00722.x
Subject(s) - stackelberg competition , cournot competition , welfare , index (typography) , economics , microeconomics , contrast (vision) , econometrics , computer science , artificial intelligence , world wide web , market economy
This article investigates the relationship between the Herfindahl–Hirschman Index (HHI) and welfare in multiple‐leader Stackelberg models. We formulate two long‐run models of free entry of followers; in the first (second) model, leaders select their output before (after) the entry of the followers. We find that in both models, in contrast to the short‐run models, the Stackelberg model yields a larger welfare and HHI than the Cournot model does regardless of the number of leaders; that is, beneficial concentration always occurs.