Equilibrium Analysis of Cournot Competition Model

Abstract

The paper discusses equilibrium solutions of Cournot competition strategy, which is a quantity based competition strategy. The paper derives equilibrium solutions of the competition strategy and analyses differences and influences of various scenarios on upstream and downstream enterprises. The paper later focuses on the comparison of the equilibrium points of Cournot and Collusion strategies when considering similar and dissimilar market demands. The difference in degrees of substitutability between duopoly retailers also has an effect on the equilibrium solution. The paper takes a numerical example to make a relevant analysis. Finally, empirical research explains pricing strategies of the duopoly in real life.