The Agreement Made Between The Firms To Make

The Cournot model, in which firms compete for production, and the Bertrand model, where firms compete on price, describe the duopoly dynamic. In an oligopoly, companies are interdependent; They are influenced not only by their own decisions about how much to produce, but also by decisions made by other companies in the market. Game theory provides a useful framework for thinking about how companies can act in the context of this interdependence. Specifically, game theory can be used to model situations in which each actor must also consider how others might react to that action when deciding on an approach. . . .



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