Cournot Competition Simulator (Nash)
Welcome to Cournot Clash, where firms fight not with advertising or gimmicks—but with quantities. You play as the head of a competing firm in a shared market. The rules are simple: produce more, and you sell more units—but the price drops for everyone. Produce less, and the price stays high—but your rival might seize the market. Can you strike the perfect balance? Your competitor is thinking the same thing. Welcome to the razor’s edge of economic strategy.
Conceptual Discussion: Cournot Competition
Concept:
The Cournot Competition is a foundational model in industrial organization economics, describing how firms compete based on quantity, not price. It captures the interdependence between rivals in an oligopoly, where one firm’s decision affects the market outcome for the other.
How It Works:
Two or more firms simultaneously decide how much to produce.
The market price is then set by the total quantity produced.
Each firm earns profit = (market price – cost per unit) × quantity produced.
The price decreases as total quantity increases (based on a demand curve).
Firms must decide:
Produce more: capture a larger market share, but lower the price for everyone.
Produce less: keep prices high, but risk being undercut.
Strategic Insight:
If both firms overproduce, they flood the market, driving prices down and reducing profit.
If both produce conservatively, they maintain high prices—but risk missing out on volume.
Nash equilibrium occurs when neither firm can unilaterally improve profit by changing output.
Real-World Applications:
Telecom companies deciding how much data bandwidth to offer.
Energy firms balancing oil production volumes.
Retailers forecasting how much of a seasonal product to stock.
Why It’s Powerful:
Cournot models highlight the dilemma of mutual restraint in competitive markets. It’s a game of invisible hands, where firms must predict and adapt to each other’s production levels—not to be greedy, but to survive.
