1. 36 Demand is linear and the goods are not necessarily perfect complements. Linear demands for a differentiated goods set-up was already introduced by Edgeworth (1897, 1925) who only solved the model for perfect complements. In Stackelberg (1934) a more extensive solution is given (for both price or quantity as strategic variables and for both simultaneous and sequential choices), see the Mathematical Appendix. Stackelberg (1934) and Allen (1938) (who give a more general form) are therefore precursors of the work of Shubik and Levitan;Ellet;See Chon� and Linnemer,1950