The Nash–Cournot equilibrium is one of the foundational concepts in industrial organisation, shaping how economists think about competition in oligopolistic markets. It builds on the work of Augustin Cournot, who in 1838 published his seminal Researches into the Mathematical Principles of the Theory of Wealth. Cournot considered the case of two firms (a duopoly) producing a homogeneous good, each deciding how much quantity to supply. He showed that each firm’s optimal output depends on its expectations of the other firm’s decision, and that the interaction of these strategic choices leads to a determinate outcome where neither firm has an incentive to deviate. This equilibrium, rediscovered and reformulated in the twentieth century with the formalisation of game theory, came to be understood as a specific instance of a Nash equilibrium, named after John Nash, who generalised the concept of mutual best responses in strategic settings.
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