Heinrich Freiherr von Stackelberg
Encyclopedia
Heinrich Freiherr von Stackelberg (October 31, 1905 - October 12, 1946) was a German
economist
who contributed to game theory
and industrial organization
and is known for the Stackelberg leadership model.
into a Baltic-German family of nobility from Estonia. His mother was an Argentinian of Spanish descent. After the October Revolution
the family fled to Germany, first to Ratibor
and later to Cologne
. He studied economics and mathematics at the University of Cologne
as an undergraduate. He graduated in 1927 with a thesis on the Quasi-rent
in Alfred Marshall
s work . He continued his studies as a Ph.D. student in economics under Erwin von Beckerath. He graduated in 1930 with a dissertation on cost theory , which was published in 1932 in Vienna. In 1934 he finished his habilitation
on market structure and equilibrium .
After his habilitation he became a lecturer at the University of Cologne. After one semester he accepted a position at the University of Berlin where he taught until 1941. In 1941, Stackelberg became professor
of economics at the University of Bonn
. In 1944, Stackelberg left Germany for Spain
, where he became a visiting professor at the Complutense University of Madrid
. He died of lymphoma
in 1946. Stackelberg was a member of the NSDAP since 1931 and a Scharführer
(Sergeant) in the SS
since 1933. However, his interactions with many German aristocrats opposed to the Nazi regime (some of whom were within his immediate family), led to his increased disillusionment with that movement to the extent that towards the end of his life he no longer supported it.
. In a standard Stackelberg duopoly situation there are two firms in a market. The number of firms is restricted to two by assuming barriers to entry. Each firm is taking into account its competitors decision on the quantity produced. Unlike in the Cournot game firms act sequentially, with the leader choosing a quantity first. The follower observes the decision of the leader and chooses his quantity.
There are some further constraints upon the sustaining of a Stackelberg equilibrium. The leader must know ex ante that the follower observes his action. The follower must have no means of committing to a future non-Stackelberg follower action and the leader must know this. Indeed, if the 'follower' could commit to a Stackelberg leader action and the 'leader' knew this, the leader's best response would be to play a Stackelberg follower action.
More generally, in a Stackelberg game one player moves before the other player, which can provide either a first-mover advantage
or a first-mover disadvantage, depending on the specific assumptions that are made in the game. Other well-known games are the Bertrand game and the Cournot game. The Nash equilibrium
plays an important role in solving the Stackelberg game and other games.
See also Stackelberg competition
.
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
who contributed to game theory
Game theory
Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...
and industrial organization
Industrial organization
Industrial organization is the field of economics that builds on the theory of the firm in examining the structure of, and boundaries between, firms and markets....
and is known for the Stackelberg leadership model.
Biography
Stackelberg was born in MoscowMoscow
Moscow is the capital, the most populous city, and the most populous federal subject of Russia. The city is a major political, economic, cultural, scientific, religious, financial, educational, and transportation centre of Russia and the continent...
into a Baltic-German family of nobility from Estonia. His mother was an Argentinian of Spanish descent. After the October Revolution
October Revolution
The October Revolution , also known as the Great October Socialist Revolution , Red October, the October Uprising or the Bolshevik Revolution, was a political revolution and a part of the Russian Revolution of 1917...
the family fled to Germany, first to Ratibor
Racibórz
Racibórz is a town in southern Poland with 60,218 inhabitants situated in the Silesian Voivodeship , previously in Katowice Voivodeship...
and later to Cologne
Cologne
Cologne is Germany's fourth-largest city , and is the largest city both in the Germany Federal State of North Rhine-Westphalia and within the Rhine-Ruhr Metropolitan Area, one of the major European metropolitan areas with more than ten million inhabitants.Cologne is located on both sides of the...
. He studied economics and mathematics at the University of Cologne
University of Cologne
The University of Cologne is one of the oldest universities in Europe and, with over 44,000 students, one of the largest universities in Germany. The university is part of the Deutsche Forschungsgemeinschaft, an association of Germany's leading research universities...
as an undergraduate. He graduated in 1927 with a thesis on the Quasi-rent
Quasi-rent
Quasi-rent is an analytical term in economics, for the income earned, in excess of post-investment opportunity cost, by a sunk cost investment...
in Alfred Marshall
Alfred Marshall
Alfred Marshall was an Englishman and one of the most influential economists of his time. His book, Principles of Economics , was the dominant economic textbook in England for many years...
s work . He continued his studies as a Ph.D. student in economics under Erwin von Beckerath. He graduated in 1930 with a dissertation on cost theory , which was published in 1932 in Vienna. In 1934 he finished his habilitation
Habilitation
Habilitation is the highest academic qualification a scholar can achieve by his or her own pursuit in several European and Asian countries. Earned after obtaining a research doctorate, such as a PhD, habilitation requires the candidate to write a professorial thesis based on independent...
on market structure and equilibrium .
After his habilitation he became a lecturer at the University of Cologne. After one semester he accepted a position at the University of Berlin where he taught until 1941. In 1941, Stackelberg became professor
Professor
A professor is a scholarly teacher; the precise meaning of the term varies by country. Literally, professor derives from Latin as a "person who professes" being usually an expert in arts or sciences; a teacher of high rank...
of economics at the University of Bonn
University of Bonn
The University of Bonn is a public research university located in Bonn, Germany. Founded in its present form in 1818, as the linear successor of earlier academic institutions, the University of Bonn is today one of the leading universities in Germany. The University of Bonn offers a large number...
. In 1944, Stackelberg left Germany for Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
, where he became a visiting professor at the Complutense University of Madrid
Complutense University of Madrid
The Complutense University of Madrid is a university in Madrid, and one of the oldest universities in the world. It is located on a sprawling campus that occupies the entirety of the Ciudad Universitaria district of Madrid, with annexes in the district of Somosaguas in the neighboring city of...
. He died of lymphoma
Lymphoma
Lymphoma is a cancer in the lymphatic cells of the immune system. Typically, lymphomas present as a solid tumor of lymphoid cells. Treatment might involve chemotherapy and in some cases radiotherapy and/or bone marrow transplantation, and can be curable depending on the histology, type, and stage...
in 1946. Stackelberg was a member of the NSDAP since 1931 and a Scharführer
Scharführer
Scharführer was a Nazi Party title that was used by several paramilitary organizations from 1925 to 1945. Translated as “Squad Leader”, the title of Scharführer can trace its origins to the First World War, where a Scharführer was often a Sergeant or Corporal who commanded special action or shock...
(Sergeant) in the SS
Schutzstaffel
The Schutzstaffel |Sig runes]]) was a major paramilitary organization under Adolf Hitler and the Nazi Party. Built upon the Nazi ideology, the SS under Heinrich Himmler's command was responsible for many of the crimes against humanity during World War II...
since 1933. However, his interactions with many German aristocrats opposed to the Nazi regime (some of whom were within his immediate family), led to his increased disillusionment with that movement to the extent that towards the end of his life he no longer supported it.
Research
The Stackelberg leadership model is a model of a duopolyDuopoly
A true duopoly is a specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market...
. In a standard Stackelberg duopoly situation there are two firms in a market. The number of firms is restricted to two by assuming barriers to entry. Each firm is taking into account its competitors decision on the quantity produced. Unlike in the Cournot game firms act sequentially, with the leader choosing a quantity first. The follower observes the decision of the leader and chooses his quantity.
There are some further constraints upon the sustaining of a Stackelberg equilibrium. The leader must know ex ante that the follower observes his action. The follower must have no means of committing to a future non-Stackelberg follower action and the leader must know this. Indeed, if the 'follower' could commit to a Stackelberg leader action and the 'leader' knew this, the leader's best response would be to play a Stackelberg follower action.
More generally, in a Stackelberg game one player moves before the other player, which can provide either a first-mover advantage
First-mover advantage
In marketing, first-mover advantage or FMA is the advantage gained by the initial significant occupant of a market segment. It may be referred to as Technological Leadership. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able...
or a first-mover disadvantage, depending on the specific assumptions that are made in the game. Other well-known games are the Bertrand game and the Cournot game. The Nash equilibrium
Nash equilibrium
In game theory, Nash equilibrium is a solution concept of a game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only his own strategy unilaterally...
plays an important role in solving the Stackelberg game and other games.
See also Stackelberg competition
Stackelberg competition
The Stackelberg leadership model is a strategic game in economics in which the leader firm moves first and then the follower firms move sequentially...
.
Publications
- Grundlagen einer reinen Kostentheorie (Foundations of Cost Theory), ViennaViennaVienna is the capital and largest city of the Republic of Austria and one of the nine states of Austria. Vienna is Austria's primary city, with a population of about 1.723 million , and is by far the largest city in Austria, as well as its cultural, economic, and political centre...
, 1932 - Marktform und Gleichgewicht (Market Structure and Equilibrium), ViennaViennaVienna is the capital and largest city of the Republic of Austria and one of the nine states of Austria. Vienna is Austria's primary city, with a population of about 1.723 million , and is by far the largest city in Austria, as well as its cultural, economic, and political centre...
, 1934 - Grundlagen der theoretischen Volkswirtschaftslehre (Foundations of Theoretical Economics), BerneBerneThe city of Bern or Berne is the Bundesstadt of Switzerland, and, with a population of , the fourth most populous city in Switzerland. The Bern agglomeration, which includes 43 municipalities, has a population of 349,000. The metropolitan area had a population of 660,000 in 2000...
, 1948 - The Theory of the Market Economy, LondonLondonLondon is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
, 1952