In the Stackelberg model, there is an advantage:
A) to waiting until your competitor has committed herself to a particular output level before deciding on your output level.
B) to being the first competitor to commit to an output level.
C) to the firm with a dominant strategy.
D) to producing an output level which is identical to a monopolist's output level.

Question

Quizplus · Accepted Answer

In the Stackelberg model, the first competitor to commit to an output level has an advantage over the second competitor because they can anticipate the reaction of the second competitor and adjust their output level accordingly. This allows them to capture a larger market share and potentially earn higher profits.

In the Stackelberg Model, There Is an Advantage