Cournot's Model is among the earliest attempts to analyse the price and output decision – market process under duopoly, but its conclusions are equally applicable to oligopolistic market situations, markets with more than two interdependent decision – making firms.
Cournot’s modern is based upon the following assumptions:
There are only two producers producing identical products.
Both the producers have indentical costs.
Each producer decides his own profit maximizing level of output on the assumption that his competitor will not change his own level of output.