How do the Bertrand, Cournot, and Stackelberg models and Nash equilibrium match these descriptions?

Question

Match the descriptions to: the Bertrand model, Nash equilibrium, Cournot duopoly, and the Stackelberg model.

1. Firms compete on price.
2. Each participant chooses the best strategy given the other participants' strategies.
3. Firms produce a homogeneous good and choose output while treating the competitor's output as fixed.
4. An asymmetric duopoly in a market with barriers to entry.

Explanation

In Bertrand competition, price is the strategic variable. In the Cournot model, firms choose output quantities, taking the competitor's output as given.

Nash equilibrium means strategies are mutually optimal: with everyone else's actions unchanged, no participant benefits by changing strategy alone. It is a general game-theory concept.

The Stackelberg model describes a leader–follower asymmetry. The leader chooses output first, anticipating the other firm's subsequent response.