Is the Leading Role Desirable?: A Simulation Analysis of the Stackelberg Behavior in World Petroleum Market

This article explores extraction profiles in the Stackelberg equilibrium of exhaustible resource industry. Calibrated with real data of world petroleum market, the Stackelberg and Cournot–Nash equilibriums are solved numerically. The properties of the Stackelberg equilibrium are compared and contrasted with the benchmark open-loop Cournot–Nash equilibrium. Simulation results indicate that the leader’s gains are limited in the Stackelberg strategic setting. Methodologically, this article pioneers solving the Stackelberg game numerically in a dynamic and empirical model. Copyright Springer Science+Business Media New York 2013