Thursday

August 28, 2014

August 28, 2014

Posted by **James** on Wednesday, April 9, 2008 at 9:15pm.

Consider a Cournot duopoly where inverse demand is P(Q) = a - Q but firms, 1 and 2, have asymmetric marginal costs, c1 and c2. What is the Nash equilibrium if 0 <ci < a/2 for each firm? What if c1 < c2 < a but 2c2 > a + c1?

Basically, I can get it down to each firm's individual reaction function's, but I am always used to assuming that the firms are identical (thus having the same marginal costs). I just wanted to maybe know the algebra behind this or simply the intution. If anyone could help that would be cool.

- Microeconomics -
**economyst**, Thursday, April 10, 2008 at 10:00amIt has been 25 years since I needed to look at Cournot models. But, I remember that things got complicated in the case where the firms had different cost structures.

The intuition behind the Cournot model can be found in a Nash Equilibrium.

Sorry I cant be more helpful.

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