This paper explores how costly price adjustment and strategic interaction may cause a leader-follower configuration to arise. While most imperfect models predict that price-setters will synchronize their moves, we show that leadership generates stable staggering.

Conjectural variation models are popular in empirical research as they infer the degree of market power from real data. IO-theorists, however, disapprove it for lack of theoretical foundation, arguing that dynamic reactions are forced into a static model with the strategy space and time horizon...

Bertrand argued that price would be driven down to marginal cost even with only two firms in the market. Chamberlin, by introducing product differentiation, argued that price will exceed marginal cost even when there are many firms. Thus product differentiation resolves the "Bertrand Paradox"....

Conjectural variation models are popular in empirical research as they infer the degree of market power from real data. IO-theorists, however, disapprove it for lack of theoretical foundation, arguing that dynamic reactions are forced into a static model with the strategy space and time horizon...

This paper introduces a new duality concept, factor income function, in order to establish the factor Price Equalization theorem and the Heckscher-Ohlin theorem in an oligopolistic Heckscher-Ohlin model with increasing returns to scale.