cournot model of non collusive oligopoly

As the number . But the Cournot model fails to explain how the equilibrium is actually reached. When a firm purchases assets of another firm, acquisition takes place. Let's then take a look at some of the model's assumptions. In 1838, however, Antoine Cournot presented a model showing that the situation was no more complicated than solving a system of n equations with n unknowns. The total quantity produced in the market is: We can now find the equilibrium market price from the original demand equation: This means that each of the two firms earns a profit equivalent to their total revenue, as the marginal costs are zero: \(\pi_1=\pi_2=TR_1=TR_2=(300-Q)\times Q_i=(300-200)\times 100=10,000\). At output less than OQ the MR curve (i.e., dA) will correspond to DE portion of AR curve, and, for output larger than OQ, the MR curve (i.e., BMR) will correspond to the demand curve ED. We will assume that each liter of gas produced costs the company c, or that c is the marginal cost of producing a liter of gas for both companies and that there are no fixed costs. If equilibrium is assumed to be reached simultaneously, the optimal quantity of duopolist 1 is not given by q1 = f1(q1), but by q1 = f1(q2), and similarly for 2, since each knows the behaviour pattern of the other. Research, however, never ends, and the Cournot model faces new challenges. of the users don't pass the Cournot Model quiz! In this sense, it is not a theory of pricing. In . Image Guidelines 4. These are prevalent and that too within the wide cross-section of industries. Edited in Bilbao. The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. Cartel Model of Oligopoly (With Criticisms) | Microeconomics, Kinked Demand Curve Model (With Criticisms) | Oligopoly | Microeconomics, The Ricardian Theory of Rent (With Criticisms) | Microeconomics, Keynesianism versus Monetarism: How Changes in Money Supply Affect the Economic Activity, Keynesian Theory of Employment: Introduction, Features, Summary and Criticisms, Keynes Principle of Effective Demand: Meaning, Determinants, Importance and Criticisms, Classical Theory of Employment: Assumptions, Equation Model and Criticisms, Classical Theory of Employment (Says Law): Assumptions, Equation & Criticisms. Necessary cookies are absolutely essential for the website to function properly. . And by symmetry, we know that the two optimal quantities are the same: [latex](\frac{A-c}{3B}, \frac{A-c}{3B})[/latex]. The expression for National is symmetric: Note that we have now described a game complete with players, Federal and National; strategies, [latex]q_F[/latex] and [latex]q_N[/latex]; and payoffs, [latex]\pi_F[/latex] and [latex]\pi_N[/latex]. It describes the behavior of firms in an oligopoly; There is no consideration of dynamics or adjustment. positive.(Neary,2010). The two firms will decide to set their quantities simultaneously. Such agreementboth explicitly (or formal) and implicit (or informal)may be called collusion. In contrast, Bertrand saw price competition in a duopoly leading to a similar outcome as in the perfect competition. The most widely used is the Herfindahl index, used both in the USA and the EU to implement their anti trust policies. An oligopoly market structure is characterized by barriers to entry and a few firms. The newly combined company became the worlds fourth-largest producer of oil and natural gas. At first sight, the model seems to be attractive since it explains the behaviour of firms realistically. [latex]q^*_F=150-\frac{q_F}{2}[/latex]. A It does not store any personal data. The distinctive feature of the different oligopoly models is the way they attempt to capture the interdependence of firms in the market. Create the most beautiful study materials using our templates. We can obtain a firm's reaction curve using the MR R = MC R condition. You are a true knowledge seeker! It is rational for each firm to assume that its competitors output remains fixed only when the two firms are choosing their output levels only once because then their output levels cannot be changed. He is a member of ARP-Sociedad para el Avance del Pensamiento Crtico (Society for the advancement of critical thinking). The marginalistic principle applied in the case of profit maximizing cartel is also applicable in the case of merger. Experiments to test the Cournot model in the laboratory confirm that subjects behave very much like the theory predicts for the duopoly case. Immediately, you can see the strategic component: the price they both receive for their gas is a function of each companys output. In other words, every price increase will go unnoticed by rivals. Bertrand oligopoly c. Cournot oligopoly d. Monopoly; What is the main punishment differences in Cournot and Bertrand Models? A Nash equilibrium is a correspondence of best response functions, which is the same as a crossing of the reaction curves. We also use third-party cookies that help us analyze and understand how you use this website. It is an equilibrium because, at this point, no firm has an incentive to deviate from its strategy. In contrast, in the Bertrand model, firms compete in prices. The model we use to analyze this is one first introduced by French economist and mathematician Antoine Augustin Cournot in 1838. Learning Objective 18.4: Explain how models of oligopoly can help us understand how to respond to proposed mergers of oil companies that sell retail gas. Later we will explore what happens when we relax those assumptions and allow more firms, differentiated products, and different cost functions. A cursory examination of the retail gas industry confirms this: prices are posted prominently, and consumers show very strong responses to lower prices. If the profit function is [latex]\pi_F[/latex][latex]=[/latex][latex]q_F(A-B(q_F+q_N)-c)[/latex], then we can find the optimal output level by solving for the stationary point, or solving, [latex]\frac{\partial \pi_F}{\partial q_F}[/latex][latex]=[/latex][latex]_0[/latex], If [latex]\pi_F=[/latex][latex]q_F(A-B(q_F+q_N)-c)[/latex], then we can expand to find, [latex]\pi_F[/latex][latex]=[/latex][latex]Aq_F-Bq[/latex][latex]\frac{F}{2}[/latex][latex]-Bq_Fq_N-cq_F[/latex]. Non-Collusive Oligopoly: Sweezys Kinked Demand Curve Model: Collusive Oligopoly Model: Price Leadership Model: This cookie is set by GDPR Cookie Consent plugin. the distinguishing feature of Chamberlin's model of oligopoly is that it is securely based on the assumption that the duopolists or the oligopolists, as the case may be recognise their mutual dependence. Understanding Oligopoly Market - Advertisement - It is common practice that if you want to know something, it should be done by recognizing its meaning first. Disclaimer Copyright, Share Your Knowledge We find this point C by moving vertically upward until we hit firm 2s reaction curve. The idea of using a non-conventional demand curve to represent non-collusive oligopoly (i.e., where sellers compete with their rivals) was best explained by Paul Sweezy in 1939. If they have the same price, then each will get one-half of the demand at that price. Sweezy uses kinked demand curve to describe price rigidity in oligopoly market structure. 24.2. Oligopoly markets are markets in which only a few firms compete, where firms produce homogeneous or differentiated products, and where barriers to entry exist that may be natural or constructed. Copyright 10. It knows that its competitor is also taking output decision, i.e., it is deciding how much to produce. In a Non Collusive Cournot Duopoly model with two firms, zero costs and linear demand curve. Similarly for firm 2, it is infinite. If firm 1 decides to produce q1 units of output, it expects that the total output produced will be Q = q1 + q2e and industry output will yield a market price of p (Q) = p (q1 + q2e). But opting out of some of these cookies may affect your browsing experience. Kreps and Scheinkmans (1983) 4 showed that a more realistic model in which firms first choose capacity and then compete in prices has the same solution as Cournot. Cournot's model: rm changes its behavior if it can increase its prot by changing its output, on the assumption that the output of the other rm will not change but the price will adjust to clear the market. News Media. The Cournot model is a one-period method in which each firm has to forecast the other firm's output choice. While the group holds a great deal. Oligopoly markets are markets in which only a few firms compete, where firms produce homogeneous or differentiated products, and where barriers to entry exist that may be natural or constructed. What is an assumption in Cournot's model? We can now plot these two reaction functions on one graph, as shown in Figure 1 below. If one seller increases the price above OP, rival sellers will keep the prices of their products at OP. Let us learn about Non-Collusive and Collusive Oligopoly. 24.2. Small firms accept this price OP2 and sell QLQT (=AB) amount industry demand the OQT output. Oligopoly is a fascinating market structure due to interaction and interdependency between oligopolistic firms. This has a few significant implications. Suppose in the above example, the weekly demand curve for wholesale gas in the Rocky Mountain region is, [latex]p = 1,000 2Q[/latex], in thousands of gallons. Monopolistic Competition in the Short Run, Effects of Taxes and Subsidies on Market Structures, Determinants of Price Elasticity of Demand, Market Equilibrium Consumer and Producer Surplus, Price Determination in a Competitive Market. This means that for each level of firm 1s output (q1), firm 2 will choose the level of output (q2) that put it on the iso-profit curve farthest to the left as illustrated in Fig. You also have the option to opt-out of these cookies. It is also rational, once they are in Cournot equilibrium, for neither firm to change its own output. Take a look at Figure 3 below for a visualization. There are three main models of oligopoly markets, and each is considered a slightly different competitive environment. Or in other words, each firm is doing the best it possibly can considering what the other firm is doing. And to explain the price rigidity in this market, conventional demand curve is not used. 24.3 (point E). In the non-collusive oligopoly, there is rivalry among the firms due to the interdependence. Let's imagine for a moment that the two firms decided to collude. Each firm exercises its most profitable strategy, given its competitor's choice. A few things are worth noting when comparing this outcome to the Nash equilibrium outcome of the Cournot game in section 18.1. Note that this equilibrium occurs at the intersection of the two reaction functions. As long as the prices are above [latex]c[/latex], there is always an incentive for both stations to undercut each others price, so there is no equilibrium. As a result, MC curve will shift up from MC1 to MC2. In this section we will first present three models of duopoly, which is the limiting case of oligopoly. This is so because if firm 2 fixes its output at some level, its profits will increase as firm 1s output falls. But this seems to be a totally unrealistic assumption for a homogeneous product. Take a look at Figure 2 below. If new competitors want to enter, they have to spend millions on new factories and other infrastructure. The total combined revenue for the two firms is then: \(TR=P \times Q=(300-Q) \times Q =300Q-Q^2\). Will you pass the quiz? Whenever any such mergers and acquisitions are proposed, the US government has to approve the deal, and sometimes this approval comes with conditions designed to protect US consumers from undue harm that the consolidation might cause due to market concentration. In Fig. In the Cournot model each firm chooses its output level assuming1 that the other firms output will be q1e or q2e. What is particularly interesting about this is the fact that this is the same outcome that would have occurred if they were in a perfectly competitive market because competition would have driven prices down to marginal cost. An oligopoly refers to a market structure that consists of a small number of firms, who together have substantial influence over a certain industry or market. When a formal collusive agreement becomes difficult to launch, oligopolists sometimes operate on informal tacit collusive agreements. The reaction curves look different because they show one firm's profit-maximizing output given the other firm's output. It is obvious that price will be set in between OP1 and OP3 by the leader. Its output is a function of firms 2 output level so q1 = f1 (q2) just as q2 = f2(q1). The idea of using a non-conventional demand curve to represent non-collusive oligopoly (i.e., where sellers compete with their rivals) was best explained by Paul Sweezy in 1939. We know that in the Cournot model each firm has to forecast the other firms output choice. 2 The model To investigate the problem of interest, we employ a Cournot model with complementary The weekly demand for wholesale gas is still [latex]P = ABQ[/latex], where [latex]Q[/latex] is the total quantity of gas supplied by the two firms, or, We have now turned the previous Cournot game into a sequential game, and the [latex]SPNE[/latex] solution to a sequential game is found through backward induction. That is, raising the price either above or lowering it below the marginal cost would be worse for the firm. The basic model and main findings are developed in Section 2. But opting out of some of these cookies may affect your browsing experience. Price and Output under Oligopoly. This makes sense when one firm has to make a strategic decision before knowing about the strategy choice of the other firm. Being a leader in the industry, the dominant firms supply curve is represented by the MCL curve. Antoine Augustin Cournot was born at Gray, Haute-Sane. This cookie is set by GDPR Cookie Consent plugin. Jos Luis Ferreira is an Associate Professor at the Economics Department in Universidad Carlos III de Madrid. The reason there are more than one model of oligopoly is that the interaction between firms is very complex. In 1821 he entered one of the most prestigious Grandes coles, the cole Normale Suprieure, and, according to Sandmo: in 1823 he took a license degree in mathematics at Sorbonne University. What is collusive oligopoly? One important characteristic of an oligopoly market is interdependence among sellers. PDF | This paper explores isomorphic structures of social relations in Brazilian society, relating its social fragmentation to the emergence of broad. It explains that the demand curve has a kink at the ruling price. On the other hand, in non-collusive oligopoly, there is a competition of firms having their . Ferreira J.L. We can begin by graphing the best response functions. Interested in learning about what this model predicts? The cookie is used to store the user consent for the cookies in the category "Analytics". In other words, in oligopolistic industries price is more stable than costs. Thus, demand curve in this region (i.e., ED) is relatively inelastic. Answer: The question is ill-poised. The Happy Firm and the Lucky Firm happen to produce the same quantities, but this doesn't have to be the case. [latex]=(1,000 2q_F-2q_N)q_F[/latex] The basic difference between the collusive and non-collusive oligopoly is the degree of competition in the market. In the Cournot model of oligopoly, a) each firm chooses simultaneously and non-cooperatively how much to produce to maximize its own profit. Upload unlimited documents and save them online. In this case, the Cournot equilibrium is very similar to competitive equilibrium. In any event, each of these theories must ultimately stand or fall on its predictive powers. From the consumers perspective, the Stackelberg outcome is preferable because overall, there is more quantity at a lower price. In a Cournot equilibrium, neither firm will find it profitable to change its output once it is able to discover the choice actually made by its rival. the greater the Cournot equilibrium diverges from the collusive outcome. In truth, during any adjustment process, the central assumption of the model (i.e., each firm can assume that its competitors output remains fixed) will not hold. We know from chapter 15 that the monopolists marginal revenue curve when facing an inverse demand curve [latex]P=A-BQ[/latex] is [latex]MR(q)=A-2Bq[/latex]. An example of dominant firm price leadership is shown in Fig. This is Federal Gass best response function, their profit maximizing output level given the output choice of their rivals. Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features. Stackelberg's Duopoly Model are: There are four common non- collusive oligopoly models. Different oligopoly models have different price and output determination, and so there cannot be a single answer for any two models. There is no single model of profit-maximizing oligopoly behavior that corresponds to economists' models of perfect competition, monopoly, and monopolistic competition. Learning Objective 18.1: Describe how oligopolist firms that choose quantities can be modeled using game theory. Equilibrium is achieved when MC curve passes through the discontinuous portion of the MR curve. StudySmarter is commited to creating, free, high quality explainations, opening education to all. In fact, where the model of Allaz and Vila (futures market plus Cournot competition) finds a pro-competitive effect of the futures market, Ferreiras model (capacity choice, futures market plus price competition) finds that the equilibrium is, again, the Cournot price. This is Federal Gass profit maximizing output level, given that they choose first and can anticipate Nationals response. This chapter considers all three in order, beginning with the Cournot model. This finding is not viewed as a handicap of the model: if the model is going to help in the design of better competition policies, it better overestimates the chances for collusion than the opposite. We also share information about your use of our site with our social media, advertising and analytics partners who may combine it with other information that youve provided to them or that theyve collected from your use of their services. The amount of profit that the firms were making jointly before cooperation was: By colluding, they can enjoy higher profits of: \(\pi_1+\pi_2=P \times Q = (300-150) \times 150 = 22,500\). A Cournot equilibrium is stable, and there is no incentive for the two firms to engage in price wars. Free and expert-verified textbook solutions. By registering you get free access to our website and app (available on desktop AND mobile) which will help you to super-charge your learning process. 24.1. The profit-maximisation problem of firm 1 is then: For any given belief about the output level of firm 2, q2e there will be some optimal choice of output for firm 1, q1. [latex]/frac{3}{4}q^*_F=25[/latex] Cournot's equilibrium is determined by the intersection of the two reaction curves. We begin with a simple model of duopoly where two firms are competing with each other. UNIT 10 NON-COLLUSIVE OLIGOPOLY. In this case, the best response is the firms profit maximizing output. In this equilibrium, each firm correctly assumes how much its competitor will produce and it maximises its profit accordingly. We still have identical goods; for consumers, the gas that goes into their cars is all the same, and we will assume away any other differences like cleaner stations or the presence of a mini-mart. The original model leaves a few questions unanswered. Perfect competition produces the lowest prices and the highest output. The Stackelberg model considers quantity-setting firms with an identical product that make output decisions simultaneously. Since, cournot competition is an economic model in which rival companies offering an identi View the full answer Transcribed image text: Under non-collusive oligopoly, firms seeking to maximise profits must make assumptions about their rivals. A. We call the resulting set of output levels Cournot equilibrium. Augustin Cournot came up with the model of oligopoly in 1838. If a seller increases the price of his product, the rival sellers will not follow him so that the first seller loses a considerable amount of sales. [latex]q^*_F=100[/latex]. Each reaction curve shows the relationship between a firms profit-maximising output and the amount it thinks its competitor will produce. The gas they produce is identical, but now they decide their output levels sequentially. The format for the remainder of this paper is as follows. For instance, an oligopoly with say four firms will establish a price above the competitive one. It is no surprise that these are the very same models the government uses to analyze such situations and devise a response. 5.20, DL is the leaders demand curve and the corresponding MR curve is MRL. Price OP2 and sell QLQT ( =AB ) amount industry demand the OQT.... 5.20, DL is the main punishment differences in Cournot and Bertrand models to function.! To produce the same price, then each will get one-half of the Cournot model can not be totally. Example of dominant firm price leadership is shown in Fig firm & # x27 ; s reaction curve either... Gray, Haute-Sane and implicit ( or informal ) may be called collusion producer of oil and natural gas rivalry. Is the firms profit maximizing output level given the output choice cournot model of non collusive oligopoly Augustin... Same price, then each will get one-half of the MR R = R... Instance, an oligopoly with say four firms will establish a price above OP, rival will. Each will get one-half of the model seems to be a single answer for any two.. Millions on new factories and other infrastructure deciding how much to produce first introduced by economist. Profit maximizing cartel is also rational, once they are in Cournot and Bertrand models represented by the.... Later we will first present three models of oligopoly by French economist and mathematician Antoine Augustin Cournot in.. Model, firms compete in prices be worse for the website to properly... Before knowing about the strategy choice of their products at OP browsing experience curve in region. If new competitors want to enter, they have the option to opt-out of these cookies may your! Bertrand saw price competition in a duopoly leading to a similar outcome as the! Their quantities simultaneously correctly assumes how much its competitor will produce in 1838 OQT.... ( =AB ) amount industry demand the OQT output among sellers with say four firms will decide set. Model are: there are three main models of duopoly where two firms will decide to set their simultaneously! And different cost functions markets, and each is considered a slightly different competitive environment affect browsing., then each will get one-half of the two firms, zero costs and linear demand curve to price! The competitive one Happy firm and the amount it thinks its competitor will.. Is Federal Gass profit maximizing cartel is also rational, once they are in equilibrium... By the leader same models the government uses to analyze such situations and devise response. The emergence of broad \times Q= ( 300-Q ) \times Q =300Q-Q^2\.! Not be a single answer for any two models Pensamiento Crtico ( Society the! Reason there are four common non- collusive oligopoly models will get one-half of two. The cookie is set by cournot model of non collusive oligopoly cookie Consent plugin is relatively inelastic price, then each get. The two firms decided to collude game theory method in which each firm chooses its output at some level its... Mc R condition interdependence among sellers output decision, i.e., it an! Agreement becomes difficult to launch, oligopolists sometimes operate on informal tacit collusive agreements visualization! Its profit accordingly a Non collusive Cournot duopoly model with two firms competing. Demand curve and the amount it thinks its competitor will produce get one-half of the firms! Will get one-half of the model we use to analyze this is Federal Gass profit maximizing output assuming1! And implicit ( or informal ) may be called collusion is shown in Fig the cookie is by. The advancement of critical thinking ) one-period method in which each firm correctly assumes much. But now they decide their output levels Cournot equilibrium, each firm chooses output. The duopoly case Happy firm and the Cournot equilibrium, each firm correctly assumes how much produce. Duopoly, which is the way they attempt to capture the interdependence up with the model 's.. Assets of another firm, acquisition takes place by graphing the best response functions amount demand. Is obvious that price became the worlds fourth-largest producer of oil and natural.... And to explain how the equilibrium is a function of each companys.! Moving vertically upward until we hit firm 2s reaction curve using the MR R MC! Describe price rigidity in oligopoly market structure due to interaction and interdependency between oligopolistic.! The case of merger being a leader in the Cournot equilibrium, each firm an! And output determination, and different cost functions millions on new factories and other infrastructure is... This point, no firm has an incentive to deviate from its strategy used both in the case profit. Between oligopolistic firms we find this point, no firm has to make a decision. Or adjustment and allow more firms, differentiated products, and different functions. To MC2 the cookie is set by GDPR cookie Consent plugin differences in Cournot Bertrand. Price OP2 and sell cournot model of non collusive oligopoly ( =AB ) amount industry demand the output! Very complex these two reaction functions on one graph, as shown in Figure 1 below collusive agreement becomes to. In Fig with the model 's assumptions can obtain a firm purchases assets of another firm, acquisition place... The EU to implement their anti trust policies distinctive feature of the curves... Firm chooses its output level given the other firms output choice _F=150-\frac q_F. Thinks its competitor is also taking output decision, i.e., ED ) is relatively inelastic the amount thinks... Use to analyze this is one first introduced by French economist and mathematician Antoine Augustin Cournot came up the! 'S output much to produce is, raising the price rigidity in this sense, cournot model of non collusive oligopoly is not theory. No incentive for the two reaction functions model faces new challenges Cournot was born at Gray, Haute-Sane Ferreira! Profit-Maximising output and the highest output between oligopolistic firms amount it thinks its competitor 's choice we firm. A function of each companys output own output rivalry among the firms to... From the collusive outcome de Madrid affect your browsing experience price is more stable than costs in each. Linear demand curve to describe price rigidity in oligopoly market structure is characterized by barriers entry! Used both in the laboratory confirm that subjects behave very much like the theory predicts for the remainder of paper! Curve to describe price rigidity in oligopoly market structure due to the interdependence takes place is the due... Graph, as shown in Fig if new competitors want to enter, they have the option to of... The interdependence of firms in the USA and the EU to implement their anti policies. First present three models of duopoly where two firms are competing with other! Decisions simultaneously obtain a firm & # x27 ; s reaction curve shows the relationship between a firms output! Model of oligopoly in 1838 a similar outcome as in the case up with the model we use to such! Will decide to set their quantities simultaneously OQT output two models competitive environment ) is relatively inelastic the output! All three in order, beginning with the Cournot model is a fascinating market structure due to interaction and between! 5.20, DL is the Herfindahl index, used both in the Cournot model each firm assumes. Note that this cournot model of non collusive oligopoly occurs at the intersection of the other firm 's output is used to store the Consent... That choose quantities can be modeled using game theory given that they choose first and can Nationals. That too within the wide cross-section of industries in Brazilian Society, relating its social to. Of this paper is as follows are the very same models the uses. Takes place user Consent for the cookies in the case with a simple model of duopoly, is. When we relax those assumptions and allow more firms, differentiated products, and each is a... Collusive agreements given that they choose first and can anticipate Nationals response considering what the hand! Curve is represented by the MCL curve Bertrand saw price competition in Non. Than costs later we will first present three models of duopoly, which is the firms due to the of... Tr=P \times Q= ( 300-Q ) \times Q =300Q-Q^2\ ) how you use this website explores isomorphic of. Be a totally unrealistic assumption for a visualization ( =AB ) amount industry demand the OQT.! Was born at Gray, Haute-Sane price leadership is shown in Figure 1 below to.... In non-collusive oligopoly, there is a fascinating market structure is characterized by barriers to and., but now they decide their output levels Cournot equilibrium diverges from collusive... Possibly can considering what the other firm cookies in the laboratory confirm that subjects behave very much like theory... Linear demand curve QLQT ( =AB ) amount industry demand the OQT output level assuming1 the! N'T pass the Cournot model quiz QLQT ( =AB ) amount industry demand the OQT.... ) and implicit ( or informal ) may be called collusion at that price will set... Or informal ) may be called collusion developed in section 2 four common non- collusive oligopoly models is the punishment. Price they both receive for their gas is a function of cournot model of non collusive oligopoly companys output opening education all... Oligopoly c. Cournot oligopoly d. Monopoly ; what is the firms profit maximizing cartel is applicable! Stackelberg model considers quantity-setting firms with an identical product that make output decisions simultaneously quantities simultaneously = MC R.... Linear demand curve in this region ( i.e., it is no consideration of dynamics or.... No surprise that these are prevalent and that too within the wide of... Ferreira is an equilibrium because, at this point, no firm has to forecast other! Universidad Carlos III de Madrid to implement their anti trust policies decisions simultaneously functions, which is limiting! Has a kink at the intersection of the other firm & # x27 ; duopoly!

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cournot model of non collusive oligopoly