The Cournot Equilibrium for n Firms

• Author: Gina Ioan, Catalin Angelo Ioan
• Pages: 374-384

European Integration - Realities and Perspectives. Proceedings 2015

374

The Cournot Equilibrium for n Firms

Gina Ioan1, Catalin Angelo Ioan2

Abstract: Oligopoly is a market situation where there are a small number of bidders (at least two) of a good

non-substituent and a sufficient number of consumers. The paper analyses the Cournot equilibrium in both

cases where each firm assumes the role of leadership and after when firms act simultaneously on market.

There are obtained the equilibrium productions, maximum profits and sales price.

Keywords: oligopoly, Cournot, equilibrium

JEL Classification: D43

1 Introduction

For Homo Oeconomicus (the abstract concept around which Adam Smith builds scientific edifice), the

ultimate goal is to achieve a maximum level of utility or profit with a minimum of effort. Regardless

of the time, circumstances, or players, maximizing the effects can only get in a perfectly competitive

scene, where responsibility of a efficient allocation of resources in a market have income, prices and

profits, guided by an ―invisible hand‖ or the freedom to choose.

In this scene, in which resists the strongest stands up to and where competition leads to efficiency and

progress, the rules are quite tough, based both on their own actions and the anticipate the actions of

other players.. The game, in its dynamics may be perceived as uninteresting to the player on stage

(because he seeks only purpose), but it can also be interesting for the same player who withdraws from

the scene and analyze it from the perspective of the researcher economist.

Depending on the number, the economic power of economic agents (either producers or consumers),

the price elasticity of demand, the degree of mobility of factors of production, the market can be

divided into: perfectly competitive market, a model more theoretical and imperfect competitive market

where we meet market monopoly, monopolistic competition market and oligopolistic market, the latter

manifesting the actual scene of the market economy.

When we refer to a perfectly competitive market, the price can not be influenced, it is resulting from

the free play of supply and demand, the manufacturer aiming to maximize the production or cost

minimization knowing the identity Rmg=Cmg=price maximizes profit. If we discuss monopolistic

1 Assistant professor, PhD, ―Danubius‖ University of Galati, Romania, Address: 3 Galati Boulevard, 800654 Galati,

Romania, Tel.: +40.372.361.102, fax: +40.372.361.290, E-mail: ginaioan@univ-danubius.ro.

2 Associate Professor, PhD, ―Danubius‖ University of Galati, Romania, Address: 3 Galati Boulevard, 8 00654 Galati,

Romania, Tel.: +40.372.361.102, fax: +40.372.361.290, Corresponding author: catalin_angelo_ioan@univ-danubius.ro.