The Stackelberg model is more appropriate than the Cournot model in situations where

Question

Quizplus · Accepted Answer

The Stackelberg model is a sequential game model where one firm, the leader, chooses its output level before the other firms, the followers, enter the market. This model is appropriate when there is a natural leader in the market and the leader has more market power than the followers. In the Cournot model, all firms choose their output levels simultaneously, which may not reflect the real-world situation. The choice A is incorrect because the Stackelberg model can be applied to situations with two or more firms. The choice B is incorrect because it describes the Cournot model. The choice D is incorrect because the Stackelberg model assumes non-collusive behavior between firms.

The Stackelberg Model Is More Appropriate Than the Cournot Model