Antoine Augustin Cournot Game Theory

Cournot: An Evaluation, Cournot Game Theory

Besides duopoly theory, Cournot provided many other important theoretical in­sights. Among them were (1) a clear statement of the simple competitive model; (2) a very advanced model of composite and derived demand (for copper and zinc to produce brass); and (3) last but not least, a full-blown discussion of the stability of various economic equilibriums, which considers the possibility of mild variations in quantity and price. Cournot's book was, in short, filled with new ideas.

Still, Cournot's contributions to method and to monopoly-duopoly theory have dominated the attention of theorists. And these ideas, especially those related to du­opoly, have attracted several critics. As previously mentioned, Edgeworth and Bertrand tinkered with Cournot's duopoly model, altering many of his assumptions. Why, for example, should a duopolist consider the quantity and not the price of his rival constant? More pointedly, how can A (for example) continue to assume that B's output will remain constant in spite of repeated evidence to the contrary? What if there were an output limit on one or both of the duopolists? And so on.

Many of these issues have been resolved, of course, but it is part of the continu­ing fascination of Cournot's model that the solution of one issue brings up two more. Oligopoly models, bilateral bargaining, and alternative assumptions concerning con­jectural variation in modern game theory have been suggested by Cournot-like mod­els. His simple model was, and continues to be, the font of many ideas in economic theory (See, for example, the box, The Force of Ideas: Game Theory, The Brainchild of Cournot.). Such powerful ideas surely place him among the first rank of economic theorists. But even more, Cournot possessed a grand vision of what economic the­ory could be—a box of tools, rooted in empiricism, which would constitute the or­ganizing principles in analyzing myriad economic problems. This cognizance, so tragically ignored by his contemporaries, carried him to a pinnacle of achievement seldom reached in the history of economic theory.