Question

2. Rank the Bertrand model, the Cournot model, and the Stackelberg model in order according to the total quantity produced in each scenario and explain why this is the case.

Answer 1

1. The Bertrand Model:- It is a model of competition used in economics. It is founded by Joseph Louis Francois Bertrand. It describes interplays among firms that set prices and their customers that choose quantities at prices set.

Diagram-1

2. The Cournot Model:- Cournot competition is an economic model describing an industry form in which rival companies offering a similar product compete on the amount of output they produce, independently and at the same time.

Diagram-2

3. The Stackelberg Model:- It is a strategic game in economics in which the leader firm moves first and then the followers firms move. It is an extension of Cournot’s model.

4. Rank of the Bertrand Model, The Cournot Model, and the Stackelberg Model:

Diagram-3