Antoine Augustin Cournot, 1801-1877, was a French philosopher and mathematician and one of the precursors of marginalism. He was Professor of mathematical analysis at the Lyon University and later on became Rector of the Dijon Academy. Cournot applied his knowledge of mathematics to economics and developed an important model on oligopolies known as Cournout duopoly model.
Cournot presented his model in his “Researches into the Mathematical Principles of the Theory of Wealth”, 1838. In this model he introduced the concepts of Nash equilibrium and non-cooperative games, decades before they were formally formulated. The model, as well as Stackelberg duopolies, considers quantity the key variable rather than price.
The difference with Stackelberg’s model is that Cournot’s is a simultaneous game in which all firms decide their output at the same time, not as in sequential games. Each firm decides its profit-maximizing quantity as a best response to other firms’ quantities. The model predicts that as the number of firms grows, competition will make total profits tend to zero.
