In this blog post I will explain the Cournot oligopoly model. If you have followed a basic micro economics course you are most likely already familiar with it. The Cournot model is part of a range of oligopoly models that try to capture the strategic interaction between firms that arises if there is only a limited amount of competition (in the sense that there are only a small number of sellers of a product).
I have divided this blog post up in to three parts. Part 1 will setup the model, Part 2 will solve the model, Part 3 will generalize the model and compare the outcomes to a monopoly. At the end you should have a good understand of the Cournot model and its implications.
Warning: long post will follow!
