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But, first, let us first know what Cournot duopoly is.The Cournot duopoly model is an economic model used to describe the structure of an industry in which the companies compete on the basis of the amount of output produced by each and the decision is taken independently and simultaneously.
The Cournot duopoly model is used with the assumption that the duopolists have identical products and identical costs. The model relation function gives a relation between the produce of thefirms taken into consideration.
Features of Cournot duopoly model:
- As the term ‘duopoly’ suggests, the model is used to analyze two firms.
- The Cournot duopoly model is used when there is a competition between two firms on the basis of quantity.
- This model assumes that the two firms will move simultaneously in terms of market demand and cost functions.
- The firms will not cooperate with each other, i.e, they will be independent of each other.
- There is no product differentiation between the firms.
- Firms have market power.
- It makes an assumption that the two firms will opt for that profit- maximizing output which they think their rival will also choose.
The important assumption of this model is that each firm aims to maximize profit on the basis of the expectation that its output decision will not have an effect on the decision of its rivals.
When you need Cournot duopoly assignment help, visit 24x7assignmenthelp.com. Here, along with getting Cournot duopoly homework help, you will also be provided with a detailed concept of the topic. So, now, let us discuss about the result of Cournot duopoly.
Result of the Cournot duopoly:
If there are n firms, each will provide n/(n+1) of the market, and the industry output will be n/(n+1).
So, we can say that as more firms are assumed to exist in the industry, the higher the total supplied and so lower will be the price.
Advantages of using the Cournot duopoly model:
- This model leads to a stable equilibrium.
- The model can be extended to any number of firms.
Another important and interesting fact about the Cournot Duopoly model is that its founder, Augustus Cournot developed this after getting an inspiration by observing competition in a spring water duopoly.
These are just some of the features of the Cournot duopoly model discussed here. When you take Cournot duopoly assignment help from 24x7assignmenthelp.com, you will be presented with a more detailed solution and many other facts of this model.
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