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Learn the Importance of the Cournot Model to Frame Better Answers

The concepts of the Cournot Model can be understood better if one has sufficient idea about oligopoly and duopoly. They are helpful in learning the actual reason why the Cournot Model was initially established and how it is employed to study and monitor the financial transactions in a market.

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Concepts of an oligopoly and duopoly in brief

An oligopoly

In an oligopoly market, there isn’t a specific limit for the number of companies, but it must be a controlled amount so that the activities of each firm influences and affects the others. The Cournot Model assignment help is sure to give enough material on this important subject matter.

A duopoly

A duopoly is a primitive form of oligopoly. A duopoly has the ability to lay identical influence on the market as that of a monopoly if the two companies decide on colluding on the output of their production processes or the prices of the products manufactured by them.

The Cournot Model of Oligopoly

• The Cournot Model of oligopoly depicts the detailed study of a particular company under the control of an oligopoly.

It can be explained by an oligopolistic market condition-

• Two industries are considered in this case with a marginal production cost of \$50 each. This cost is considered invariable.

The calculation is conducted via the following steps-

• The determination of the net productivity of the company and the price of the products is established.
• The obtained results are compared in accordance to perfect competition and pure monopoly.

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The Cournot’s Model of Duopoly

To begin with, two identical mineral springs are considered. They are controlled by separate owners. They sell the mineral water produced in the exact same market. This consequently suggests that they are selling identical mineral water. This consideration is in accordance with the concepts of a duopoly of homogeneous products.

The next assumption stated that both owners who sell mineral water did not require any initial cost for the production process.Lastly, it was assumed that they worked in such a way that neither of their moves affected the business of the other.

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