... the dominant firm price leadership model, each built upon different assumptions and result in different equilibrium outputs. I am going to examine each in turn, a discussion which mirrors that in Waldman and Jenson1. * Cournot-Nash Model - considers a duopoly market with identical firms, facing identical costs and no product differentiation. Each firm believes that its competitor will always maintain its current output i.e. they assume that rivals will not react to changes they implement. Equilibrium is reached where each firm's output is the best response to its rival's output and where both firm's output maintenance assumptions concerning the other are correct. It is a game of imperfect information because it is a simultaneous move game. This model has been used in the airline industry between American Airways and United Airlines. * Stackelberg Model - this model considers what would happen if the Cournot model is viewed as a two ...

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