Cournot Model

It is an oligopoly model where two firms that produce identical products or have identical cost functions compete in a state setting with homogeneous products where each endeavors to enhance profits by selecting the best way to produce in the appropriate quantity.

They compete by assuming the competitor will not change their product in response. It is used in finance and marketing in duopolies where the strategies were concentrated on extremely perfect competition or monopolies.  The equilibrium created in such a scenario is called the Nash equilibrium.  

There can be conditions of imperfect competition or duopoly where the firms individually set prices that can be constrained by the rivals. In the model of a duopoly – the players are the firms, the actions of each firm are a set of possible outputs and the payoff of each is its profit. 

Equilibria in the model generating different commodities economic outcomes where the firm may have to change its behavior by investing in the future where it can increase profits by changing the output in conditions where the other firm will not change the output but the price will adjust to clear the market.