Comparison between Simultaneous and Sequential Movements in a Duopoly Game

Abstract

In general, a Stackelberg competition benefits the leader and the consumer due to making the first move in a sequential game. However, in this paper, sequential movement does not offer an advantage over simultaneous movement in a static duopoly under quantity competition with an isoelastic demand function. By introducing dynamics into the duopoly model through numerical simulations of simultaneous and sequential movements towards the Cournot equilibrium, there is evidence of first-mover advantage. However, simultaneous movement is advantageous over sequential movement in terms of better profits for both firms and lower prices for the consumer.