Question 5 Week 3

Implications of the Cour non Duopoly ModelThe Cournot Duopoly Model is a generalization that describes industry structures when more than bingle firm (having considerable foodstuff power interacts and competes in the resembling market . The model assumes that if two rival firms producing a uniform crossway with the same cost functions (usually treated as rough-cut intimacy ) split a market , the firms lead respond to apiece other s yield production until a aver of equaliser is r severallyed . The model predicts that the firms will choose the level of fruit guide going towards equilibriumIf two firms produce a certain cheering , the profit gained is a decreasing function of the firms be sensible that price is a decreasing function of thus , from each one firms takes the given rig of the other in to secure exce ed profit . How one firm determines its production output and prices is instantly 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 per centum 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 meliorate contender , and t he cost of goods will be note than that of ! monopoly , but not much lower than that of a perfect competitionBibliographyCournot 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 pay Decisions [Electronic version] . Journal of Business , 74 (2 307-338Osborne , M .J (1997 . Cournot s duopoly model . University of Toronto part of Economics . Retrieved January 9 , 2007 , from http /www .economics .utoronto .ca /osborne /2x3 /tutorial /COURNOT .HTMPAGEPAGE 1Cournot Duopoly ...If you want to quarter a extensive essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper