American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
The Limits of Limited Commitment
American Economic Journal: Microeconomics
(pp. 254–80)
Abstract
We study limited strategic leadership. A collection of subsets covering the leader's action space determines her commitment opportunities. We characterize the outcomes resulting from all possible commitment structures of this kind. If the commitment structure is an interval partition, then the leader's payoff is bounded by her Stackelberg and Cournot payoffs. Under general commitment structures, the leader may obtain a payoff that is less than her lowest Cournot payoff. We apply our results to a textbook duopoly model and characterize the commitment structures leading to consumer- and producer-optimal outcomes.Citation
Bizzotto, Jacopo, Toomas Hinnosaar, and Adrien Vigier. 2026. "The Limits of Limited Commitment." American Economic Journal: Microeconomics 18 (1): 254–80. DOI: 10.1257/mic.20240310Additional Materials
JEL Classification
- C72 Noncooperative Games
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection