Suppose Cournot duopolists firms face the same market demand curve but have differing costs. At the Nash-Cournot equilibrium, the firm with the higher cost will have a smaller profit than its competitor.
In 1838, Cournot raised the problem of two or more firms competing in an imperfectly competitive market, and instability in the market to outgrow the other. Cournot duopolist also known as oligarchy is a market competition where only a small number of sellers form the market.
It is a competitive market among the few. All firms choose output (quantity) simultaneously. And the basic assumption of Cournot is that each firm chooses its quantity, taking given the number of its rivals.
The concluding equilibrium is a Nash equilibrium in quantities, called a Cournot (Nash) equilibrium. And here, thus the firm with the higher cost will have less profit.
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