Question
In the context of oligopoly, consider the following statements : (a) Cournot’s equilibrium is a Nash equilibrium. (b) Stackelberg equilibrium is a Nash equilibrium. Select the correct answer from the code given below :
The correct answer is
Both (a) and (b)
Both statements are true in their respective games. Cournot equilibrium is a Nash equilibrium of simultaneous quantity choice. Stackelberg equilibrium is a subgame-perfect Nash equilibrium of the sequential leader–follower game, and therefore is also a Nash equilibrium.
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