Cournot Competition
Categories: Company Management, Metrics
It sounds like a wine tasting tournament. But really it's an economic model.
In a Cournot competition situation, companies in a particular industry make products that are indistinguishable from each other. Firms decide how much of the product they want to make, with the price (and ultimately the profitability of the profit) determined by the total amount of product in the market. Eventually, the theory goes, the companies will reach an equilibrium.
It was originally developed as a model for duopolies, or markets with two competitors. The Cournot situation requires a number of assumptions (like the products being homogenous and the companies not working in concert with each other). So, in the real world, a Cournot scenario exists more as a thought experiment, or a model for discussion, than a description of any real-life situations. Still, it has a good deal of academic usefulness.