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Cournot’s model of oligopoly - page 6 / 38

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Conclusion

Game has unique Nash equilibrium:

( q 1 , q 2 ) = ( ( α c ) / 3 , ( α c ) / 3 )

A t e q u i l i b r i u m , e a c h fi r m s p r o fi t i s ( α c ) 2 / 9 .

Note: Total output 2(α c)/3 lies between monopoly output (α c)/2 and competitive output α c.

6

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