Stackelberg Model in Oligopoly Market

Stackelberg model

Cournot assumes that in a duopoly market, decision making is simultaneous.

Stackelberg assumes that decisions are made sequentially.

In the Stackelberg model, the leader firm chooses its output first and then the follower firm chooses after observing the leader’s output. (“top dog” strategy).

The leader earns more than in Cournot’s simultaneous game, while the follower earns less.