The Stackelberg oligopoly model is different from the Cournot model in that _____.

a. products are differentiated, not identical

b. there are three firms in the model, not just two.

c. one firm gets to choose output before the other firm

d. one firm is rational, while the other uses the maximin strategy

• The correct answer is (c); one firm gets to choose output before other firms.

In a Stackelberg oligopoly model, one firm gets to choose the line of product to venture into and gets to set the prices in the market unlike in the Cournot model where all the firms in the industry get to make a similar move at the same time. No matter what mode of movement firms decide to use in approaching a given market, the firm that gets to maximize its profit margins is the one that lowers its cost of production.