Edgeworth Model

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Edgeworth Model

The Edgeworth's Model assumes that

  • There are two producers in the market.
  • The product is identical,
  • Cost of production is zero,
  • Market is equally divided between the two producers so that each producer’s demand curve is half of the total market demand, and 
  • Each producer believes that the rival will not change his price when he changes it.

Thus, Edgeworth's Model all the assumptions of Cournot ‘s Model except that while Cournot assumed that rival will not change his output, Edgeworth assumes that the rival will not change his price.


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