difference between the assumption of a cournot's model and the stactelberg model ?
Answer (1)
Student Expert
2nd May, 2020
Hello,
Cournot model & Bertrand model are oligopoly models in which firms produce a homogeneous good. In the former model, each firm assumes its rivals will not change the quantity they produce while In the later model, each firm assumes its rivals will not change the price they charge.
In both the cases, each firm takes some aspect of its rivals’ behavior taking into consideration either quantity or price as fixed when making its own decision.
The major difference is that in case of Bertrand model the firms end up producing where price equals marginal cost, whereas in the Cournot model the firms will produce more than the monopoly output but less than the competitive output.
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