Stackelberg versus Cournot equilibrium

We reconsider Stackelberg's classical critique of the Cournot duopoly, in the framework of endogenous timing for two-player games. For quantity duopoly we provide different sets of minimal conditions, directly on the demand and cost functions, yielding respectively the simultaneous and the two sequential modes of play. While our findings essentially confirm the predominance of the former, they also indicate that the latter is natural under some robust but restrictive conditions. No extraneous assumptions (such as concavity, existence, or uniqueness of equilibria...) are needed, and the analysis makes crucial use of the basic results from the theory of supermodular games. Classification Numbers: B21, C72, D43, L13. (C) 1999 Academic Press.