Cournotmalli

Cournotmalli is a theoretical framework in industrial organization that extends the classic Cournot model of oligopoly to settings where firms compete across multiple markets or product lines. In this approach, each firm selects a vector of output quantities for the markets it serves, and the prices in each market are determined by the aggregate quantities offered. The term appears in some Nordic economics literature as a multi-market variant of Cournot competition.

Formal setup: there are N firms and M markets. Firm i chooses q_i = (q_i1, ..., q_iM). The inverse demand in market m is P_m(Q_m), with Q_m = sum_i q_im. Profit for firm i is π_i = sum_m [P_m(Q_m) q_im] − C_i(q_i), where C_i denotes firm i’s cost function, which may include fixed costs, convex marginal costs, or economies of scope. Cross-market interaction arises through shared constraints, such as total capacity, or through inter-market demand effects, creating strategic linkage across markets. A Cournotmalli equilibrium is a profile of quantities where each firm’s vector maximizes its profit given the others’ quantities.

Existence and stability: Under standard regularity assumptions (continuous, concave profit functions and compact strategy sets), a Nash equilibrium exists. Uniqueness depends on the curvature of the demand functions and the strength of inter-market coupling; linear-quadratic specifications often yield a unique equilibrium when capacity constraints are absent or well-behaved.

Variants and applications: Dynamic and stochastic versions incorporate time and uncertainty. The model is used to analyze competition among diversified firms, the impact of capacity constraints on prices and welfare, and regulatory questions in multi-market environments such as energy, telecommunications, and retail platforms.

See also: Cournot competition, oligopoly theory, multi-market competition. Further reading includes standard texts on oligopoly and multi-market models.