cournot_solver function

Cournot Duopoly with numeric solution

This function numerically finds the equilibrium in a Cournot duopoly model with quadratic functions. For guaranteed existence of equilibrium, cost parameters should be non-negative.

cournot_solver(firm1 = c(0, 1, 0), firm2 = c(0, 1, 0), demand = c(0,
  -1, 0))

Arguments

• firm1: a vector of cost curve coefficients, which must be in order: intercept of firm 1's cost function, linear term's parameter of firm 1's cost function and quadratic term's parameter of firm 1's cost function
• firm2: a vector of cost curve coefficients, which must be in order: intercept of firm 2's cost function, linear term's parameter of firm 2's cost function and quadratic term's parameter of firm 2's cost function
• demand: a vector of demand curve coefficients, which must be in order: intercept of inverse demand function, linear coefficient, secon degree coefficient

Returns

List with market price, firm output, profits and market share

Examples

d = c(20,-1,0)
cournot_solver(demand = d)

Author(s)

Diego S. Cardoso, Dyson School of Applied Economics & Management, Cornell University mail@diegoscardoso.com