How to Solve A Stackelberg Oligopoly Problem
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This video solves a standard Stackelberg problem that is encountered when studying oligopoly models. You may also be interested in my other economics videos, especially those on Cournot and Bertrand competition.
Пікірлер: 125
You explained this better than my book and college professor could do in weeks. God bless you
My online microeconomics lecturer is abysmal. These videos are helping me understand stuff massively. Thank you!
This has been more helpful than a 2 hour lecture on this topic! Thanks so much
More than i would ever learn in class.. Thanks so much!
@Ravenuscze
8 жыл бұрын
+lol m2k explained in 5mins :D
I just wanted to say thank you so much, this was way more useful than the stuff in class very easy and straight forward!
THANK YOU!! I have my exam tomorrow, and I can without a doubt say, I learnt more from your channel in 30 mins than I ever did during any two hour lecture.
My term 1 MBA exams are tomorrow and here I am, thankyou so much
Thank you so much! This was very helpful before my final exam.
Great, accessible explanation! Helped with last minute studying for my intermediate microeconomics final. Many thanks!
God bless you and your children :D 4:35 "nananana..."
Thanks man. I'm currently in my first semester at university and these simple examples makes studying for exams so easy
@alitanman26
Жыл бұрын
How has life been after graduation?
@XinShu.
6 ай бұрын
time flies by so quickly , i am also in the first semester in university ,wish 3 years later i can give you my life answer ,but surely , i think i will head to the master degree...@@alitanman26
Thank you for the understandable tutorials. Both the cournot and this one
Very easy to understand, thank you for the explanation.
11 years later, still helpful!
Thank you so much! Only decent video on Stackelberg I found so far.
but what if the firms face 2 different MC, the example im trying to complete changes the MC of one firm from when the reaction functions were worked out.
how did you get from p=70-1/2 q1 to MR1=70-q1?
@EconomicsinManyLessons
9 жыл бұрын
Firm 1's inverse demand is P = 70 - 0.5q1. Firm 1's total revenue, TR = P x q1, TR = (70 - 0.5q1)q1 Multiply through by q1 gives TR = 70q1 -0.5q1^2 Take derivative to get: MR = dTR/dq1 = 70 - 2(0.5)q1 = 70 - q1. A short-cut method: given an inverse demand given by P = a - bq, the marginal revenue equation will be the same as the price equation but with a slope that is twice as steep: MR = a - 2bq.
@wontkillbe
9 жыл бұрын
1sportingclays THIS IS WHAT I NEEDED TO SEE!!! THANK YOU!!
@PrashantKumar-vz1ke
6 жыл бұрын
1sportingclays thanks
@figerzysims2641
6 жыл бұрын
thanks so much!
@Mr99lior
5 жыл бұрын
Dealing with Monopoly (The first mover works as a monopoly at that stage), in that shape of equation, u simply multiply *2 the q coefficient.
hi there when you differenciate p to mr in respect to q1 would the 70 not disappear and the mr=-q1???
this helped a lot with a trivial matter thanks a lot sir
This is very benefit a video. Thank you so much 🙏🙏🙏
What I needed :)) Easy to understand and brief ! Thank you !
@EconomicsinManyLessons
2 жыл бұрын
You are welcome!
How do you calculate the profit? I mean I know its the Stackelberg price times the Monopoly quantity subtracted by the cost etc. But why is the monopoly quantity used not the Stackelberg quantity to get profit?
thanks for this video it helped me pass the test
why the reaction function value is not included while calculating marginal cost, since q2 is also a function of q1 therefore Marginal cost should be 20. Please reply ASAP thanks
Thank you, it help me a lot, I passed my exam with 89% :)
Thank you, very useful content!
thank you!! i managed to answer my quiz problems~
Thanks a lot, this was helpful !!
thank you so much!!!!!!!!!!!!!it is an exceptional video! i have nothing understood through my university's lessons, Yours sincerely Konstantinos S.Apostolopoulos/DMS,MBA NTU
OMG what did you do to the kid between pause ^^ I laughed there ^^ Great video though thanks.
your explanation is amazing...on point...thanks hey
𝑞1 = 720 − 2𝑝1 + 𝑝2 𝑞2 = 720 − 2𝑝2 + 𝑝1 Compute each firm’s output at the subgame perfect equilibrium of the sequential game when firm 1 is the leader, and the firms compete on quantity. How to do this question please???
There are two firms whose market demand is :Q=3200-1600P. Their costs are - Firm1 :TC1 =0.25q1 and Firm2 : TC2 =0.5q2 . Firm1 is leader whike firm2 is follower , solve for stackleberg output levels ,market price and profit levels of the firms. I'm not able to get the answer, please help me out .
I have a problem like this.where i need to find the Stackelberg market equilibrium. Market demand is Q=3200-1600p where Q=Q1+Q2 and the cost function of two firms 1(the leader) and 2 (the follower) are: TC1(Q1)= 0.25Q1 and TC2= 0.5Q2. Will you please solve this for me.I will be helpful to you..
thank you it was extremely helpful
Thank you so much, it helps a lot.
Thank you very much!!! good explanation.
thanks man, very useful
Good explanations :) Thank you
thanks, great help for the upcoming test (:
Very helpful. thanks 😊
Thanks, Understood clearly
Thank you for saving me before my exam 🙏🙏
@EconomicsinManyLessons
Жыл бұрын
You are welcome!
Can you please make an example of multi leader followers game؟
thanks very much. That helped
Thanks Guys really helpfull.
Thank you for the explanation. I am going through looking for easy videos for Cournot, Betrand, Sweezy and Stackleberg. Also, sounds like someone is reaching out from the beyond at the 2:10. The ghost of Stackleberg.
Well appreciated but the TC was not specified either for Q1 or Q2 so differentiating it to get MC which is equal to c and equal to MR at equilibrium is not understandable to me. 🙏🙏
If you have two cost functions (one for each firm), which one do you differentiate to get MC? Or do you combine them to get TC and then differentiate? Great video thanks!
@EconomicsinManyLessons
9 жыл бұрын
You will differentiate both cost functions to get the MC of firm 1 and MC of firm 2. You will set the MR of firm 1 (Stackelberg leader) equal to firm 1's MC. When deriving firm 2's reaction function (as shown in my Cournot video), you should set firm 2's MR equal to firm 2's MC.
Thank you so much!
Hello mate, Thank you for making me understand the stackelberg model. I have a small question, How did you derive MR = 70 - q1, from P=70-1/2q1? Please help, Many Thanks,
@EconomicsinManyLessons
9 жыл бұрын
Yoges Ramsurrun Let me explain it two ways. First, MR is exactly like the inverse demand equation but with a slope that is twice as steep. So if P = a- bQ, MR = a - 2bQ. In the video P = 70 - 0.5Q, so MR = 70 - 2(0.50)Q, which equals 70 - Q. Second, a firm's revenue (R) = price times quantity, or R = PQ. substitute the inverse demand equation into revenue equation to get: R = (70 - 0.5Q)Q = 70Q - 0.5Q^2. Take the derivative of the revenue function (R = 70Q - 0.5Q^2) to get MR, which gives MR = 70 - Q.
@yingyang9482
2 жыл бұрын
@@EconomicsinManyLessons thank you
I can't thank you enough for this, brilliantly articulated. My math is terrible but you have ensured I'll do good in my Micro exam....gana graduate :D
@BlackDeath12345
9 жыл бұрын
AlamedanBreezyRep me too :) is ur major econ as well?
what if firm 2 has a fixed cost to enter the market? will it change its MC?
@rimshakhan1333
5 жыл бұрын
Same question 🙋
Bless your soul.
really good!!
THANK YOU!!!!!!
Can you please explain how differentiating 70-1/2 Q1 makes 70-Q1
@tomaco0341
Жыл бұрын
have you figured it out yet???\
Shouldn't the reaction function from Firm 2 be substituted into the profit function of Firm 1, instead of the revenue function? Since the problem faced by Firm 1 is to optimise profit and not revenue.
@EconomicsinManyLessons
4 жыл бұрын
Firm 1 profit = TR (Q1, Q2) - TC (Q1). You can substitute into either the revenue or profit function...you get the same result either way because firm 2's output is only part of the revenue function of firm 1.
How can you get Q2=30-1/2Q1 ?
@EconomicsinManyLessons
6 жыл бұрын
TR2 = (100 - q1 - q2)q2 = 100q2 - q1q2 - q2^2. The partial derivative of TR2 with respect to q2 is MR2 = 100 - q1 - 2q2. Set MR2 = MC2 to get 100- q1 -2q2 = 40. Solve for q2 = 30 -1/2q1.
how did you get MR = 70 - q1 from P = 70 - (0.5)q1 ?
@EconomicsinManyLessons
10 жыл бұрын
Firm 1's inverse demand is P = 70 - 0.5q1. Firm 1's total revenue, TR = P x q1, TR = (70 - 0.5q1)q1 Multiply through by q1 gives TR = 70q1 -0.5q1^2 Take derivative to get: MR = dTR/dq1 = 70 - 2(0.5)q1 = 70 - q1.
Top dad
I wish my dad was an econ master
A quick tip, If you have already solved the same equation for a Cournot equilibrium, the Stackleburg solution will just be, the (Cournot equilibrium)x(3/4) For Example q2=(Cournot EQ)*(3/4) q1=q2*2 In the context of this series... q2=20*(3/4) q2=15 q1=15*2 q1=30
If MC of the firms are 0. Then is Cournot and Stackelberg solution the same? Mine is coming the same. Just confirming
@EconomicsinManyLessons
4 жыл бұрын
In Cournot, assuming each firm has the same marginal cost (or MC = 0 for both firms), each firm will produce the same quantity of output. In Stakelberg, with the same conditions, the Stackleberg leader will produce twice as much output as the other firm. Try this video: kzread.info/dash/bejne/n5ynlKWdXc6epdI.html
What if firm 2 is the mover and firm 1 is to follow? I suggest you make a video of a solution of such situation with different cost structures. Thank you
@EconomicsinManyLessons
4 жыл бұрын
Here's a video with different cost structures: kzread.info/dash/bejne/imGm1Lhygda7cdI.html
Am getting P=0 and q2 as 0 is that normal?
@enverburtul1908
5 жыл бұрын
no
Thank u so muchhh
THANK YOU
Nice one
What's weird is my firm 2's output was also half of firm 1's output? Why is this happening
@EconomicsinManyLessons
Жыл бұрын
This is a feature of the model whenever both firms have the same marginal cost.
@gabe75001
Жыл бұрын
@@EconomicsinManyLessons Awesome, thanks for still replying!
Don't know if you can help with a simple "problem" on stackelberg.
hello sir how did p=70-(1/2)q1 become MR=70-q1
@EconomicsinManyLessons
4 жыл бұрын
Please see my commemt to Jerry Yu's post. For a simple explanation, MR will equal the inverse demand with a slope that is twice as steep.
you video saved my ass, thx
@EconomicsinManyLessons
Жыл бұрын
I am glad to hear that!
How MC got equal to 40 as we were differentiating it with respect to q1 but TC= 40Q not 40q1
@EconomicsinManyLessons
5 жыл бұрын
Total cost for firm 1 is TC = 49q1, the derivative is 40. Do a similar thing for firm 2, writing TC = 40q2.
How did you made the partial derivation of IT=70P-1/2(q1)(P) shouldn´t it be Img=70+1/2(q1) ??? Thank you for your answer. (Great job by the way! Helps a lot!)
@cesar9dit
10 жыл бұрын
sorry the Img should read as follows: Img=70-1/2(q1)
@cesar9dit
10 жыл бұрын
symbolab.com/solver/partial-derivative-calculator/%5Cfrac%7Bd%7D%7Bdp%7D(70p-%5Cfrac%7B1%7D%7B2%7Dqp)
@LD-xo2cy
10 жыл бұрын
César Alfonso García Valdés You multiply Pxq1 to get TR, then find the partial derivative of TR/q1. It should look like this instead. symbolab.com/solver/partial-derivative-calculator/%5Cfrac%7Bd%7D%7Bdq%7D(70q-%5Cfrac%7B1%7D%7B2%7Dqq). Cheers.
the only problem now is I have fixed cost as well and I am not sure what to do with that :/
@EconomicsinManyLessons
4 жыл бұрын
The presence of fixed cost will not affect marginal cost. Fixed cost is just a constant, and the derivative of a constant is zero. If this video used fixed cost like TC = 40Q + 200, the answers would be unchanged.
MY MAN!
INTRESTING
What is the basically difference between cournot and stackelberg?? It's actually seems same ..! Is it?
@EconomicsinManyLessons
5 жыл бұрын
Cournot firms set their output at the same time. In Stackelberg, one firm sets it output first, the other firm then responds by setting its output.
@duaali1169
5 жыл бұрын
@@EconomicsinManyLessons thank you so much sir..! Tomorrow is my exam..!and Am so much confused...!! But m clear in stackelberg and cournot..! For this ! Thanks to you 😊
i don't know how can i thanks you
You are a god. My savior.
thanks
@EconomicsinManyLessons
2 жыл бұрын
You are welcome!
Great Stuff but MR1 = Q1
this must be absolute bs, if i calculate it the way u do with my example its totally wrong
❤
Not bad!
veeeeery nice ??
verheerend nicke
Set speed to 1,25x. Jeez dis dude is slow.
THANK YOU