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What is Market Leader-Follower Dynamics about?

This document summarizes a model of market leader-follower formation between firms in quantity-setting competition. The model assumes firms produce at maximum capacity each period based on initial capabilities and investment capital. It shows that the firm with the larger initial investment will become the market leader, with higher quantities and profits. Over time, if market conditions change and the market expands, the model demonstrates a catch-up process where the smaller firm can gain market share. Si

Author

darudetr

Language

EN