研究報告書

Reexamination of Stackelberg Leadership : Fixed Supply Contracts under Demand Uncertainty

eng

61

1

16

1998-01

Version of Record

This paper shown an endogenous Stackelberg leader-follower relation that stems purely from commitment, not from chronological order of entry. We consider a symmetric oligopoly game with a priori demand uncertainty. Each supplier can choose to make either a short-term or a long-term contract with retailers. Once a contract is signed, it mandates the supplier to supply a constant quantity throughout the contractual term, whether short or long. The demand uncertainty resolves by the time when a short-term contract expires. At that stage, a supplier on a short-term contract can re-adjust its supply quantity based upon the observed demand. On the other hand, a long-term contract can serve as a quantity commitment device. Thereby a supplier's choice between short- and long - term contracts depends upon the degree of demand uncertainty as well as time preferences. There exist cases where only one supplier makes a long-term quantity commitment and thereby exercises a Stackelberg leadership, even though the suppliers indeed play a pure strategy subgame perfect (i.e., best-response) equilibrium．

Working Paper