The Cournot Equilibrium for n Firms

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

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

 
FREE EXCERPT
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.

To continue reading

REQUEST YOUR TRIAL