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Dilfraz Singh, Lovely Professional University Unit-16: Duopoly and Oligopoly: Cournot Model and Kinked Demand Curve
Notes
Unit-16: Duopoly and Oligopoly: Cournot Model and
Kinked Demand Curve
CONTENTS
Objectives
Introduction
16.1 Meaning of Duopoly
16.2 The Cournot Model
16.3 Price Determination Under Oligopoly
16.4 Summary
16.5 Keywords
16.6 Review Questions
16.7 Further Readings
Objectives
After studying this unit, students will be able to:
• Know the meaning of Duopoly.
• Studying the Cournot Model.
• Know price determination under oligopoly.
• Know the changes in cost.
Introduction
To know the characteristics of oligopoly, we do further the study of price and production
determination by monopolistic firms. But we limit our analysation from the non-collusive monopoly
model of Sweezy and price determination and collusive monopoly model of Cartel.
16.1 Meaning of Duopoly
The duopoly is the unique part of monopoly theory where there are only two sellers. Both the sellers
are independent and there is no agreement between both of them. However, there is no agreement
between them but if one changes his price and production, the other will be affected and it is possible
to create a change of reactions. But there might be possible that one seller thinks that the change
does not affect other and put the changes in his price. On the other hand, if the seller thinks about
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