Question 5 Week 3

Implications of the Cour non Duopoly ModelThe Cournot Duopoly Model is a generalization that describes industry structures when more than adept firm (having considerable food market power interacts and competes in the resembling market . The model assumes that if two rival firms producing a uniform produce with the same cost functions (usually treated as rough-cut companionship ) split a market , the firms lead respond to for apiece one other(a) s yield production until a aver of balance wheel is r each(prenominal)ed . The model predicts that the firms will choose the level of fruit token going towards equilibriumIf two firms produce a certain square(p) , the profit gained is a decreasing function of the firms be assured that price is a decreasing function of thus , each firms takes the given output of the othe r in to secure best profit . How one firm determines its production output and prices is at present affected by its rival s decisivenesss - if one firm increases its output or prices , the other firm changes its output and prices to match it . from each one firm attempts to maximize profits by pickings into accounting system the output or price decisions of the other firmEventually , both firms will have an equal market sell where there are no incentives for changing output decision , and will hang only normal profits .

The output will be greater than that of monopoly , but less than that of a arrant(a) contender , and the cost of goods will be demoralize than that of monopoly , but not much lower than that of a perfect co! mpetitionBibliographyCournot duopoly (2006 , November 28 . Wikipedia . Retrieved January 9 2007 , from hypertext transfer protocol /en .wikipedia .org /wiki /Cournot_duopolyKanatas , G Qi , J (2001 . infirm Competition , Agency , and financing Decisions [Electronic version] . Journal of Business , 74 (2 307-338Osborne , M .J (1997 . Cournot s duopoly model . University of Toronto discussion section of Economics . Retrieved January 9 , 2007 , from http /www .economics .utoronto .ca /osborne /2x3 /tutorial /COURNOT .HTMPAGEPAGE 1Cournot Duopoly ...If you want to call for a extensive essay, order it on our website: OrderEssay.net

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