SFB 303 Discussion Paper No. A - 331

Author: Weber, Shlomo
Title: On Hierarchical Spatial Competition
Abstract: In this paper we consider a hierarchical model of spatial electoral competition with two dominant players (incumbents) and one entrant. The incumbents engage in a noncooperative game against each other and act as Stackelberg leaders with respect to a vote-maximizing entrant. We prove that the equilibrium of this game, called a hierarchical equilibrium, exists and is unique for an arbitrary single-peaked distribution of voters' ideal points. Moreover, we fully characterize the set of equilibrium strategies and show its equivalence to the set of strategies generated by a perfect foresight equilibrium.
Keywords: Spatial competition, dominant players, entry, hierarchical equilibrium
JEL-Classification-Number: 026
Creation-Date: December 1991
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