Cournot Duopoly

Cournot duopoly is an economic model describing how two companies competing in the same market decide how much to produce. Each firm chooses its quantity based on what it expects the other to produce, aiming to maximize its own profit. They do this simultaneously, considering the other's output influence on prices. The outcome is a balance point called the Nash equilibrium, where neither firm benefits by changing its production alone. This model explains how competition affects prices, supply, and market efficiency when only two dominant firms operate in an industry.