Theoretical Models of Oligopolistic Behaviour

The origins of theoretical models of oligopolistic behaviour date back to the appearance of simplified models of duopoly during the mid-nineteenth century. The best-known of such models was developed by Cournot1 who discusses a situation of rivalry between two proprietors of mineral springs each selling identical bottles of spring water. Cournot assumes for simplicity that there are no costs of production, and also that no additional sellers of spring water are permitted by the local authorities to set themselves up in competition.