Cournot Competition | Microeconomics by Game Theory 101
This lecture introduces simultaneous competition over quantities. Two firms in duopolistic competition choose how much of a homogeneous good to produce. The total quantity produced determines the price, and firms attempt to maximize their profits.
We work through the solution as a three step process:
1) Deriving the first firm's best response
2) Deriving the second firm's best response
3) Finding a pair of quantities that are a mutual best response
The quantities found in the third step are the equilibrium of the game.
0:00 Introduction
0:37 Cournot Model Setup
5:36 Solution Strategy
7:41 Deriving the Best Response Functions
13:53 Solving the Equilibrium
Пікірлер: 23
0:57: In *Stackelberg* competition we have sequential moves.
Hands down the best game theory content on the internet. Thanks a million for this!! - If anyone hasn't checked out his book, I guarantee you won't find game theory more simplified anywhere.
Looking forward to this new series thanks for taking the time to make these
The class material didn't help me to understand this concept, neither did my professor, other youtube videos or any other source of information. You sir, are a legend! Thank you!
@15yearoldogi
2 жыл бұрын
Neither did Business degree from University, Economicst = empty-headed.
Thank you for this, very helpful supplement to lectures!
Amazing, thank you
Thank you! You are the best !
Please solve: A variant of this example was first introduced by Augustin Cournot (1838). Two identical firms, players 1 and 2, produce some good. Assume that there are no fixed costs of production, and let the variable cost to each firm i of producing quantity qi ≥ 0 be given by the cost function, ci (qi ) = q 2 i for i ∈ {1, 2}. Demand is given by the function q = 100 − p, where q = q1 + q2 .
damn bro... I wish I had this for my exam last month :(
Good video. It would be great if you could do some actual working examples
Cournot? More like “Cool, yo!”, because I think this stuff is really neat. Thanks for making all these videos!
This also means q_1 = (a - 2c_1 + c_2) / 3
Thank you for this! Can you also go over the Bertrand’s Model please?
@Gametheory101
4 жыл бұрын
Yep, plan is to do that after Stackelberg.
@rebekahfrogoso5326
4 жыл бұрын
Looking forward to it! Sorry just a question, let's say there's a capacity constraint of F=20 and the NE without the capacity constraint is (24,18). In the case of F=20, do I consider firm 1 to produce 20 instead of 24 and plug it in firm 2's best response function to find the new NE with the constraint?
@Gametheory101
4 жыл бұрын
@@rebekahfrogoso5326 That will probably get you to the right answer, but you should double check that firm 1 wants to produce 20 given that firm 2 is playing its best response to firm 1 producing 20.
What if they don't know each other's marginal costs?
Is it possible to understand all game theories exist in microeconomics in 4 days I'm going to lose my master degree if I dont pass it
@PunmasterSTP
2 жыл бұрын
Dang it sounds like things came down to the wire, and I hope they went well. How did things turn out?
@brandonwalker6069
2 жыл бұрын
@@PunmasterSTP If their comment was true and they were starting with no understanding of game theory then they almost certainly failed their qual exam.
@PunmasterSTP
2 жыл бұрын
@@brandonwalker6069 That was my hunch, but I was still curious. I've made something of a habit of replying to old comments that mention an upcoming (for the time) event. It's led to some cool conversations, and hopefully it drives up engagement on the videos.