Okay so anticipation makes Qb a function of Qa.. solving it out means we should produce more.. And mathematically we decuce higher profits.. But how does that work intuitively? You should do another video explaining the pragmatic intuitive reasoning
Good question. The intuition behind the increase in output (of the leader form) is the strategic force. By producing more, the leader does not only earn additional profit brought by the extra unit (this part is similar to Cournot comp), but can also REDUCE the output of the follower firm. (Notice that this is not possible in Cournot, as the competing firm (i.e., the follower) won’t be able to observe the leader’s output.) When the follower produces less, it means the market price will be higher and thus there is extra incentive for the leader firm to produce more. I hope it helps explain the rationale.
@@ecfred Yeah that makes sense, but over all quantity goes up right? So wouldnt that drop prices in the general market even if player 2 reduces output, since player 1 is producing more?
Drop the background music please. It is nothing but a distraction, especially if you like the music.
Kudos for the video!
Wonderful video! You have saved me from embarrassing myself in my mid-term.
incredible video! it's really easy to grasp, thank you so much.
thank you very nice... music can be lowered?
I had to hear it at 0.50x to understand something. But I finally did. Thanks.
"The simplified equation is..."
*Makes things 100 times more confusing*
Okay so anticipation makes Qb a function of Qa.. solving it out means we should produce more.. And mathematically we decuce higher profits.. But how does that work intuitively? You should do another video explaining the pragmatic intuitive reasoning
Good question.
The intuition behind the increase in output (of the leader form) is the strategic force. By producing more, the leader does not only earn additional profit brought by the extra unit (this part is similar to Cournot comp), but can also REDUCE the output of the follower firm. (Notice that this is not possible in Cournot, as the competing firm (i.e., the follower) won’t be able to observe the leader’s output.) When the follower produces less, it means the market price will be higher and thus there is extra incentive for the leader firm to produce more.
I hope it helps explain the rationale.
@@ecfred Yeah that makes sense, but over all quantity goes up right? So wouldnt that drop prices in the general market even if player 2 reduces output, since player 1 is producing more?
Im sure theres something im missing that will click as i keep learning but i really wanna tie this knot in my brain 😂
Fairly intuitive. Thanks a lot.
thank you for this video, it helped me a lot !
highly intuitive. Thank you
Thank You!
Can we stop spewing equations and solve things intuitively? Thanks
The music in this video is too annoying makes difficult to get concentrate
This music is terrible