In choosing the optimal output, the monopolist had only to consider its own costs and the demand curve that it faced. How do things change under duopoly and what does the Cournot model argue about how firms will behave?

What will be an ideal response?

The duopolist has another factor to consider: how much output will its rival produce? The more the rival produces, the less market is left for the other firm in the duopoly. In the Cournot model, each firm looks at the market demand, subtracts what it expects the rival firm to produce, and chooses its output to maximize its profits based on the market that is left.