A stochastic multiple leader Stackelberg model: Analysis, computation, and application
Journal
Operations Research
Subject
Management Science and Operations
Publishing details
Authors / Editors
DeMiguel V; Xu H
Biographies
Publication Year
2009
Abstract
We study an oligopoly consisting of M leaders and N followers that supply a homogeneous product (or service) noncooperatively. Leaders choose their supply levels first, knowing the demand function only in distribution. Followers make their decisions after observing the leader supply levels and the realized demand function. We term the resulting equilibrium a stochastic multiple-leader Stackelberg-Nash-Cournot (SMS) equilibrium. We show the existence and uniqueness of SMS equilibrium under mild assumptions. We also propose a computational approach to find the equilibrium based on the sample average approximation method and analyze its rate of convergence. Finally, we apply this framework to model competition in the telecommunication industry.
Keywords
Programming; Noncooperative games/group decisions; Stackelberg game; Equilibrium existence; Uniqueness; Sample average approximation
Available on ECCH
No
