duopoly


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Related to duopoly: Bertrand duopoly

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 ?
But he expressed the same fears that it would be difficult for the third telco player to recover because of the duopoly of the two giant telco firms.
This is mainly how the duopoly of PLDT and Globe have maintained a stranglehold on the local telecommunications market.
He explained that the duopoly cannot get rid of their legacy network because half of their subscribers are still on call and text mode.
It is well known that in Hotelling's (1929) spatial model with quadratic transportation costs, where location and price are determined sequentially by firms, the incentives to move away from competitors in order to lessen price competition in fact dominate the market share effect and duopoly firms differentiate maximally on locations.
Theoretical research| The economic theory of market conduct and performance under duopoly market structures is subsumed in a larger literature focused on the economics of "few sellers" or oligopoly.
Charisse Ma Lebron, the author of the new Marin Institute beer duopoly report, joined Marin Institute as advocacy & outreach manager in Nov.
Our paper builds on their results in three ways: providing an additional setting of homogeneous goods duopoly, providing the profits under the three scenarios (Hegji and Moore's monopoly and differentiated price duopoly, and our homogeneous goods duopoly) with and without service provision, and a discussion of the managerial implications in terms of both service provision and product differentiation.
Based on earlier comparative figures, the latest inventory build would suggest overall stocks held by the duopoly might surpass 13 million tonnes, while their sales of refined products could have fallen to around 16.
We find that a configuration where both firms adopt flexible technologies requires less-demanding technology cost conditions in the mixed duopoly than in the private duopoly.
The other founders are Duopoly co-helmer Liz Manne and 1409 Entertainment prexy Al Cattabiani.
With this acquisition, Fisher will have a strong duopoly situation in Portland.
Despite a profitable quarter, obstacles at Warner include $700 million of debt and increasing competition from the Universal and Sony BMG recorded music duopoly, company officials said in the SEC filing.