In the price-leadership model, there is one dominant firm in the industry that fixes up the price of the product and all other firms accept that price and determine their quantities accordingly. The simplest case of price leadership under the following assumptions: (i) There are two independent firms, (ii) They produce perfect substitute products, (iii) The product is pershiable so [...]
The following points highlight the top three models of duopoly. The models are: 1. The Cournot Model 2. The Stackelberg Model 3. The Chamberlin Model. Duopoly Model # 1. The Cournot Model: The oldest determinate solution to the duopoly problem is by the French economist, A.A. Cournot in 1838, who took the case of two mineral water springs situated side [...]
The uncertainty is respect of behaviour pattern of a firm under oligopoly arising our of their unpredictable action and reaction makes a systematic analysis of oligopoly difficult. However, classical and modern economists have developed a variety of models based on different behavior assumptions. These models can broadly be classified into two categories (I) classical duopoly models and modern oligopoly Duopoly [...]