In the Stackelberg model, the leader has a firstminusmover advantage because it A. has lower costs than the follower. B. reacts to the follower's decision. C. differentiates its output. D. chooses its output to manipulate the follower to produce the output that most benefits the leader.

Question

Ada Benson

Business

30 March, 09:18

In the Stackelberg model, the leader has a firstminusmover advantage because it A. has lower costs than the follower. B. reacts to the follower's decision. C. differentiates its output. D. chooses its output to manipulate the follower to produce the output that most benefits the leader.

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Answers (1)

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Charles Yang · Answer 1

D. chooses its output to manipulate the follower to produce the output that most benefits the leader.

Explanation:

Strackelberg model is one where a market leader makes the first move and then the other followers firms follow sequentially.

For this model to be successful, the followers need to observe the leader and follow their lead in a production process or venture.

The market leader usually has an advantage that enables it make the first move.

For example a firm that has a monopoly in a market leads while new entrants follow.

In this model the market leader chooses an output and manipulates the followers to produce the same output, and this benefits the leader