CAUDEX QUARTUS

Abstract

In Chap. 6 we integrated Stackelberg action as a choice alternative in the dynamic Cournot process. It turned out that such a strategy might be more profitable than either Cournot equilibrium or Stackelberg leadership. The question was also raised why Stackelberg never considered dynamic action in just his own model: If the follower indeed follows the proper Cournot best reply at every move the leader chooses to take, why does the leader not design a changing supply policy over time so as to yield maximum total profit over a longer period? In this stub we set up the leader’s dynamic production planning formally. We immediately see that the usual stationary Stackelberg conditions do not satisfy the dynamic optimum conditions. These may be difficult to derive explicitly—with finite planning horizon the problem gets a strategic planning character. There, however, remains a lot of interesting issues for numerical study.