In the Stackelberg model,the leader has a first-mover advantage because it
A) has lower costs than the follower.
B) commits to producing a larger quantity.
C) reacts to the follower's decision.
D) differentiates its output.

Question

Quizplus · Accepted Answer

In the Stackelberg model, the leader has an advantage in being able to commit to a certain quantity before the follower even takes action. This allows the leader to produce a larger quantity, giving them a first-mover advantage in the market. The other options (A, C, and D) are not necessarily true or exclusive to the leader's advantage in the Stackelberg model.

In the Stackelberg Model,the Leader Has a First-Mover Advantage Because