Quantity Competition in Product-Variety Networks

The aim of this paper is to show how pricing in Cournot competition affects the market in network models. The model presented in the article Uschev and Zenou (2018) was chosen as the network model. The main innovations of this model are the combination of two main approaches to modeling networks – spatial and monopolistic. It is also worth noting the modification of the Bonahich centrality formula, which allows us to take into account the influence of the number of competing firms on each other. In the process, the Uschev and Zenou (2018) model was solved in a Cournot competition. Optimal prices and output were obtained, and the influence of network parameters such as the spatial discount factor and the rescaled substitutability parameter on the equilibrium price was described. In addition, the option of a model without a network effect, as well as public welfare, was considered. The most important element of the work is the proof that for small values of the degree of the firm's node, the prices for Cournot are higher than for Bertrand.