In a Stackelberg oligopoly, the follower second firm determines its production from its Cournot best- response function.

Question

Quizplus · Accepted Answer

In a Stackelberg model, the first firm (leader) sets its output level to maximize its profits, and then the second firm (follower) determines its production level based on its Cournot best-response function. This allows the leader to have an advantage in the market and potentially capture more profits.

In a Stackelberg Oligopoly, the Follower Second Firm Determines Its