The Cournot Oligopoly model describes a market structure in which a small number of firms compete by choosing quantities to produce, rather than prices. Each firm decides how much to produce with the assumption that the output levels of the other firms remain constant. This interdependence leads to a Nash Equilibrium, where no firm can benefit by changing its output level while the others keep theirs unchanged. In this setting, the total quantity produced in the market determines the market price, typically resulting in a price that is above marginal costs, allowing firms to earn positive economic profits. The model is named after the French economist Antoine Augustin Cournot, and it highlights the balance between competition and cooperation among firms in an oligopolistic market.
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