Suppose we have two firms with constant marginal costs of Ci and C2 that face a market demand curve of D(p). Assume that c2 > 41.
Also, we assume a homogeneous product. The Cournot model uses quantities, yı and y2, as the strategic variable.
In other words, each firm maximizes its profit with respect to yı for firm 1 and y2 for firm 2.
If price of a product, pı for firm 1 and p2 for firm 2, is used as the strategic variable, what is the equilibrium price for each firm?