duopoly

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Duopoly

A situation in which two companies split all or nearly all the market share of a good or service. There are two models for duopoly: the Cournot model and the Bertrand model.

In the Cournot model, the two companies assume the output of the other, resulting in greater output than in a monopoly, but less than in a state of perfect competition. This pushes prices lower, but not as low as they would be in perfect competition.
In the Bertrand model, the duopolistic companies compete for the lowest possible price, resulting in perfect competition. Both models are applicable in different situations and times and neither expresses duopolistic behavior perfectly. Major examples of duopolies include Pepsi and Coca-Cola in the soft drink market and Microsoft and Apple in the computer operating system market.

duopoly

a subset of OLIGOPOLY, describing a MARKET situation in which there are only two suppliers. There are a number of models of duopoly markets which fall into two main categories:
  1. nonreactive models that do not allow for any anticipation by one firm of his competitor's reaction to either a price or quantity change. For example, in the Bertrand duopoly model, each supplier assumes that his rival will not change price in response to his own initial price cut, and this assumption will encourage him to cut his price in order to increase his sales. Since both firms reason in this way, the price will eventually be driven down to the competitive level (i.e. a NORMAL PROFIT equilibrium). In the Cournot duopoly model, it is quantity not price that is adjusted, with one firm altering its output on the assumption that his rival's output will remain unchanged. Since both firms reason in this way output will eventually be expanded to the point where the firms share the market equally and both secure only normal profits;
  2. reactive models that explicitly assume that the two firms recognize that their actions are interdependent and hence will attempt to avoid mutually ruinous forms of rivalry. Also called collusive duopoly Specifically, firms will attempt to maximize their joint profits by establishing agreed prices above the competitive equilibrium

price. This can be achieved by informal means such as the acceptance by both duopolists that one of them acts as price leader (see PRICE LEADERSHIP model) or by means of formal COLLUSION between the two duopolists (see CARTEL).

References in periodicals archive ?
The commission also held up Sinclair Broadcasting Group's intended $985 million acquisition of seven stations belonging to Allbritton Communications over potential duopolies.
But Jane Kirtley, who directs the Silha Center for the Study of Media Ethics and Law at the University of Minnesota, says the battle over media duopolies will rage as long as American media remains a for-profit enterprise and the FCC remains beholden to politics.
Joyce agrees that even if the FCC clamps down on media duopolies, it's up to the citizens in each media market to hold TV affiliate owners accountable.
Other evidence from the antitrust experience also suggests that duopolies or highly concentrated industries often compete intensely.
DE, DE) is the equilibrium in both the mixed and private duopolies so we just need to compare [TSp.
I think clustering with duopolies or triopolies makes sense because it can eliminate duplications.
Rhode Island-based LIN TV says it will be looking to buy out stations where it currently has local marketing agreements in order to add to its fully owned duopolies.
This includes five duopolies in the top 10 markets: New York, Los Angeles, Chicago, Dallas and Washington D.
This includes five duopolies in the top 10 markets -- New York, Los Angeles, Chicago, Dallas and Washington D.
This includes six duopolies in the top ten markets, New York, Los Angeles, Chicago, Dallas, Washington D.
Across the Arab Countries from the Atlantic Ocean to the Arabian Gulf, fixed services monopolies and a few GSM duopolies are the norm.