Cournot Competition

Cournot Competition is an economic model that describes how firms compete on the quantity of output they produce. In this scenario, each company decides how much to produce based on the expected output of its competitors. By choosing their production levels simultaneously, firms aim to maximize their profits while considering how their output affects market prices. The model illustrates how companies with similar products can influence each other's decisions, leading to an equilibrium where the market reaches a balance of supply and demand. This interaction helps economists understand oligopolistic market behaviors.