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    Cournot model of competition

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    a) In the Cournot model of competition the best response of an incumbent firm to
    the entry of a new firm is to reduce output. Explain why this is so.

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    https://brainmass.com/economics/pricing-output-decisions/cournot-model-of-competition-407652

    Solution Preview

    The Cournot Model of competition is an economic model that takes into account two companies that produce a homogenous product. In other words, the model attempts to predict the behavior of two businesses that make up a given market. The duo firms involved try to decide the quantity of the goods ...

    Solution Summary

    In the Cournot model of competition the best response of an incumbent firm to
    the entry of a new firm is to reduce output. Explain why this is so.

    $2.19