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.
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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).

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
(2) Demand for retailer is assumed for bundle products as stochastic in nature; that is, [D.sub.r] = ([P.sub.r] - [P.sub.1] [P.sub.2])(M(2 - 2[P.sub.r] + [R.sup.a.sub.2] + [R.sup.b.sub.2])/2) and the demand of the duopolistic manufacturers is also stochastic in nature; that is, [mathematical expression not reproducible].
The result was that both media players suffered substantial losses and bad press, while the government was able to re-assert the duopolistic media market that Singapore has since retained (Lee, 2010: 132-133; Lee, 2014: 30-31).
Bardey and Rochet (2010) modeled duopolistic competition between health plans, and designated the plan with the larger network as the PPO, but did not model the option to use out-of-network care, although they mentioned it in their introduction.
WALLSTEN, 2009) a possibly more plausible (but also not proven) hypothesis would be that the presence of two competing platforms is a main driver of investments, and that both the NRA policy and the competition from alternative DSL-operators is highly determined by the pre-existing duopolistic market structure.
Now that the smartphone market has evolved towards a more predictable duopolistic high-end and homogeneous, yet highly fragmented low-end, the battle is shifting away from smartphones to wearable technology.
Ericsson to date does not have a similar China foothold, and while Ericsson cemented its strong second-place status in the duopolistic MCP market (with Jasper in the lead) with its GMA and Bridge Alliance wins, it will now be pressed to develop an effective response to Jasper's win with China Unicom.
The important detail is that the primary market for natural gas in Mexico, where CFE is the largest customer, should not be under monopolistic or duopolistic control by SEOs.
(28.) Galera and Zaratiegui (2006) consider duopolistic third-degree price discrimination with heterogeneity in constant marginal cost and show that price discrimination can improve social welfare even if the total output does not change.
Navy, owing not only to the utility of the hardware but to the fact that Great Britain and Germany were developing technical and duopolistic leadership in the field of communications.' In the United States during this time, the Naval Consulting Board had identified a need for a general research center, but the proposal had for years been mired in debate over how best to characterize the laboratory's work.
The existence of a duopolistic structure in banking must perforce reduce competition if the 'natural' organization is some form of oligopoly.
The latter subsidiary is engaged in duopolistic competition with a local competitor.