Economics becomes a science · 1770s–1920s
1838
The mathematics of a few sellers
Antoine Cournot models markets with one and two producers.
French mathematician Antoine Augustin Cournot wrote the first mathematical models of monopoly and of a market shared by two producers, each choosing how much to make while guessing what the other will do.
💡 Why it made sense then
Many real markets had only a few big sellers, and their behaviour couldn't be explained by pure competition.
Ideas it gave us
- 🏗️ Oligopoly
An oligopoly is a market dominated by a few large firms, each of which must consider how the others will react. Airlines, wireless carriers and cloud computing are examples.
- 🏗️ Monopoly
A monopoly is a market with a single seller and no close substitutes, which lets it set a higher price and sell less than a competitive market would, creating deadweight loss.
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