Why is the Cournot equilibrium stable (i.e., why don't firms ha... | Filo
Why is the Cournot equilibrium stable (i.e., why don't firms ha... | …
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Cournot Duopoly! A Cournot duopoly is a market structure in which two firms compete with each other, producing homogeneous products and setting quantities rather than prices. Key Features: 1. Two firms (duopoly) 2. Homogeneous products 3. Quantity-setting (not price-setting) 4. Firms have some market power Cournot Equilibrium: The Cournot equilibrium is reached when each firm chooses its optimal quantity, given the other firm's quantity. This results in a stable market outcome. Assumptions: 1. F
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