A DUAL VISTA OF THE STACKELBERG DUOPOLY REVEALS ITS FUNDAMENTAL QUALITATIVE STRUCTURE

In a general setting, the envelope theorem and fundamental comparative statics; curvature theorems for the Stackelberg leader and follower a re proven in a simple and direct fashion using a dual method. The comp arative statics theorems are unconventional from a primal point of vie w, which explains why they are heretofore undiscovered. The theorems a re applied to a classical model of entry deterrence so as to elucidate their economic interpretation. The difference between the qualitative comparative statics properties of the leader and follower allows, in principle, an empirical test of the leader-follower role. (C) 1998 Els evier Science B.V.