The profits of the follower in a Stackelberg duopoly:
A) are greater than those of the leader.
B) equal those of the leader.
C) are less than those of the leader.
D) All the statements associated with this question are correct.

Question

Quizplus · Accepted Answer

The follower's profits in a Stackelberg duopoly are typically less than those of the leader. This is because the leader has the advantage of being able to set their output level before the follower, which allows them to capture a larger share of the market and potentially push the follower out of the market entirely. Therefore, the follower may have to accept lower profits in order to avoid being driven out of the market altogether.

The Profits of the Follower in a Stackelberg Duopoly