Cournot Model

The Cournot model describes how firms in a market compete based on the quantity they decide to produce. Each firm chooses its output level, considering what the others are producing, aiming to maximize its profit. The market price then depends on the total combined production, with higher overall output typically lowering the price. Firms reach an equilibrium when no one can improve their profit by changing output alone. This model illustrates how competing companies influence each other's decisions and the overall market supply, leading to a stable strategic balance.