+2 votes
asked ago in General Economics Questions by (2.3k points)
Typically Cournot equilibrium is taught with identical zero or constant-MC cost functions for the two firms, because that is simpler.  I think that's a bad approach. The result of the symmetry is that when  you get to the reaction functions and the diagrams, it is very confusing because the two firms look alike.  Also, quadratic total cost is an easy way to have rising MC, and the algebra doesn't get any harder.

Also, are the diagrams worth it, especially the Stackelberg diagram? Probably for the sake of teaching reaction functions for use in other settings, but it's really a lot easier to understand with words and equations instead.
 I've just tried putting that approach into practice, which also allows integration of multiplant monopoly, in my online MBA course. My example is at http://rasmusen.org/papers/cournot.tex and http://rasmusen.org/papers/cournot.pdf.  My example doesn't have numbers that turn out neatly; I hope somebody else is inspired to improve on it.

1 Answer

+1 vote
answered ago by (2.3k points)
I posted this simultaneously on EconSpark and EJMR an hour ago, and already I have 3 serious responses on EJMR (and one joke answer).

 EconSpark readers,  if you want the site to survive, you'd better start commenting, seriously OR with jokes.
commented ago by (900 points)
Actually, you can't comment on questions, only on answers. I think that is part of the problem. AER members being pointed to https://economics.stackexchange.com/ would probably help more. There the site infrastructure is way better, there's just a lack of professional economists to answer questions. You might include it in your comparisons though.
commented ago by (780 points)
Thanks for the feedback.  Commenting for questions is now enabled.