This paper analyzes a generalized Stackelberg model of market competition with noisy observation. The current prevailing Stackelberg model and Cournot market are two extreme cases of this generalized Stackelberg model. In this generalized model, as the follower relies less on the inaccurate noisy observation and more on prior information and conjecture for his statistical inference and decision, the value of moving first and strategic commitment of the Stackelberg leader decreases and his profit lowers. On the other hand, the profit of the follower increases and the equilibrium moves towards the Cournot model and away from the Stackelberg model.