The critical problem faced by a smashed in an oligopoly is that its decisions affect the legal injurys and quantities of its rivals. The oligopoly problem arises because, where in that pry are both a few suppliers to the market; the request for the product of one(a) securely depends signifi sack uptly on the price and outturn. A non-cooperative duopoly is an patience consisting of two starchys in which sloppeds ascertain their decisions independently and can be classified according to whether firms treat criterion or price as the key strategic variable. When it comes to quantity move there are two major models put forward. The first, highly-developed by Cournot in 1838 is based on firms setting quantities synchronally where apiece firm is setting the outfit that maximises its profit give the output of its rival. In 1934 Stackelberg argued that one firm takes the role of leader with the other firm acting as a follower emphasising the quantity leadership view. b oon the leader anticipates the response of the follower and uses this to its own advantage. Bertrand in 1883 argued that price, not output, should be the firms decision variable where rivalry between the duopolists would subdivision in both(prenominal) setting a zero price.
all(prenominal) of the models provides a unlike equilibrium output and welfare level We withdraw a linear market demand curve, P(Q) which is given by a - Q where a is a positive parameter. Further we gain that all firms would incur the same constant per unit drudgery cost, c, where c The Cournot model puts forward a case for simultaneous quantity setting where at the beginning of each end! the firms take their decision independently and simultaneously. Here the profits of firm f (same as TR) will depend on both outputs which is given by ?1 = q1(a - q1 - q2). If you want to get a in full essay, order it on our website:
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