What kind of market structure does Cournot model describe?

Cournot model describes the field structure of oligopoly cities.

I. Meaning:

1, Cournot model is also called Cournot duopoly model, or duopoly model. Cournot model is an early oligopoly model. It was put forward by the French economist Cournot in 1838.

2. Cournot model is the earliest version of Nash equilibrium application, and Cournot model is usually used as the starting point of oligopoly theory analysis. The conclusion of Cournot model can be easily extended to the case of three or more oligarchs.

Second, the price competition mode:

1. Assume that two oligarchs produce products that can be substituted for each other and have differences at a fixed cost in 40 yuan, assuming that there is no variable cost and the marginal cost is 0. The market demands faced by the two oligarchs are as follows:

d 1:q 1 = 24–4p 1+2 p2，

D2:Q2 = 24–4p 2+2p 1 .

So the profit of oligarch 1 is:

π 1 = p 1q 1–40 = 24p 1–4p 12+2p 1p 2–40 .

Maximize profits:

dπ 1/DP 1 = 24–8p 1+2 p2 = 0 .

The reaction function of oligarch 1 P 1 = 3+P2/4 is obtained. Similarly, the reaction function P2 of oligarch 2 is 3+p1/4.

Therefore, the equilibrium price P 1=P2=4, the equilibrium output Q 1=Q2= 16, and the equilibrium profit π 1=π2=24.

2. The equilibrium achieved by this collusion-free behavior among oligarchs is called Cournot equilibrium. If oligarchs conspire to maximize the profits of the joint venture, then the equilibrium obtained is * * * seeking equilibrium. We can calculate the * * equilibrium point P 1=P2=6, Q 1=Q2= 12, π 1=π2=32, and the profit is higher than Cournot equilibrium.