(redirected from duopolistic)
Also found in: Dictionary, Encyclopedia.


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.


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 ?
If we assume a duopolistic market composed of two companies with the same cost structure and the same strategy, potential duopolies will decrease a lump-sum price in order to supply for a third of the potential subscribers.
entry models evaluate entry in the context of duopolistic competition
In the duopolistic commercial airplane market, will the order cancellation be boon for The Boeing Company (NYSE: BA-Free Report)?
In order to study the effects of informational differences on firm behavior and the implications of the market structure in new markets, we examine duopolistic competition under asymmetric information where the uninformed firm is a multinational that operates in more than one market.
Moreover, it is a duopolistic world in which neither market forces nor regulation can be presumed to adequately protect consumer welfare.
Grupo Modelo's operations are focused in the highly profitable, duopolistic market of Mexico, where ABI does not have a presence, and in the U.
The use of a duopolistic framework also suggests greater realism, as in Knickerbocker [1973], and generality than the monopolistic or perfectly competitive models, and follows the broadening of trade models to oligopolistic behavior as done by Dixit [1983].
The strategic trade theory which, in any case, interjects the theory or principles of industrial organisation or strategy into the theory of trade, suggests that in an imperfectly competitive industry in which firms located in different countries are engaged in monopolistic or duopolistic competition, taxes and subsidies could be used by one of the partner countries in order to obtain a greater share of profits and of the world market.
In this duopolistic market, Commercial Aircraft Corporation of China, Ltd, alias Comac, announced it is all set to deliver its first airplane to its customers.
The absence of political leadership, after the first rush of reform in the sector, led to key state institutions being unable to attract or retain the skills to direct and regulate this key infrastructure industry, with its monopolistic and duopolistic legacies
The Act called for (among other things) expanded programming, definition of "reasonable" rate levels (defined as those obtained in duopolistic cable markets), and rate controls.
When a duopolistic or oligopolistic structure of the market prevails, which is the case in almost all the consumer durables in Pakistan, the firm's decision to indigenize is influenced by the rival firm's decision to indigenize.