Do the duopolists in a Cournot equilibrium face a prisoners' dilemma? Explain

Yes, The duopolists in Cournot?s equilibrium face prisoner?s dilemma. Duopoly is a market situation where there are two firms operating. These firms make a cartel and set prices of the product in such a way as maximizing their output. Example of such is, in India there are only two companies manufacturing heavy trucks and tractors, Ashok Leyland and TATA Motors. Each firm in a duopoly market is in monopoly of half of the market share. Prisoner?s dilemma is a situation in which each firm adopt dominant strategy, but both these firms can perform better by cooperating. The firms under duopoly market face prisoner's dilemma because each firm will charge lower price and earn smaller profits and more sales because if it charges higher prices it can not expect the other firm to also increase the price.