Stackelberg Leadership
In the same market as the Cournot duopoly (price P = 120 − Q, zero costs), Firm 1 commits to its quantity first and Firm 2 observes it before choosing its own. In the subgame perfect equilibrium, what quantity does the leader (Firm 1) produce?
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Source: Heinrich von Stackelberg, 'Marktform und Gleichgewicht' (1934). Statement written for AxiomIQ.