Managerial Economics and Strategy, 2/e

11.2 Cournot Oligopoly

How do the great number of oligopolistic firms that do not collude interact? Although economists have only one model of perfect competition and one model of monopoly, they have many models of noncooperative oligopolistic behavior with many possible equilibrium prices and quantities.

Which oligopoly model is appropriate in a particular market depends on the characteristics of the market, including the type of actions firms take (such as whether firms set prices or quantities), whether firms act simultaneously or sequentially, and the number of periods over which firms compete. In this chapter and in Chapter 12, we examine oligopoly models in which firms act simultaneously and compete in a single period. In Chapter 13, we ...