Question

in Cournot Oligopoly, Each firm believes rivals will hold their output constant if it changes its output. <- what does it mean by this ? can anyone explain in detail?

Answer 1

The line actually means Each firm trusts rivals will hold their yield steady in the event that it changes its yield

Detailed

The Cournot model of oligopoly accept that rival firms create a homogenous item, and every endeavor to amplify benefits by picking the amount to deliver. All organizations pick yield (amount) at the same time. The fundamental Cournot suspicion is that each firm picks its amount, taking as given the amount of its rivals. The subsequent balance is a Nash balance in amounts, called a Cournot (Nash) balance.

The Cournot show gives results which are of some significance to modern financial aspects. As a matter of first importance, it very well may be demonstrated that cost won't much of the time measure up to marginal costs (see costs) and Pareto productivity isn't accomplished. Besides, how much each association's cost surpasses marginal expense is straightforwardly relative to the association's piece of the overall industry and contrarily corresponding to the market versatility of interest.

On the off chance that the oligopoly is symmetric, that is, all organizations have indistinguishable items and cost conditions, at that point how much cost surpasses marginal expense is contrarily identified with the quantity of firms.

In this manner, as the quantity of firms builds, the harmony approaches what it would be under immaculate challenge. All the more for the most part, it very well may be appeared for the business how much cost surpasses marginal expense is straightforwardly relative to the Herfindahl-Hirschman Index of focus. As fixation rises, industry execution goes amiss more from the standard of flawless challenge.