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Related to duopoly: Bertrand 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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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 ?
That would have created a third strong player in the market to challenge the Boeing-Airbus duopoly -- exactly what the antitrust law seeks to encourage.
discussed as a rising star to one day challenge the Duopoly, maybe we should first ask how we can leverage the recently opened API (application program interface) and build a business with them also.
(2014) is a recent addition to the duopoly literature initiated by d'Aspremont and Jacquemin (1988, 1990) where R&D expenditures cause a reduction in a marginal cost parameter.
In April at the Top CEO conference in Jeddah, Middle East media executives expressed their concerns over two giants' duopoly, calling on the governments to move draw up taxation on the two companies, Arab News reported on Monday.
Wang, "Complex dynamics analysis for a Bertrand duopoly model with bounded rationality," in Proceedings of the International Conference on Management Science and Engineering (ICMSE '09), Moscow, Russia, September 2009.
Bischi and Naimzada [9] first gave the general formula of bounded rationality in a duopoly game, where each firm uses the local knowledge of its marginal profit to adjust strategy in a new period: increasing its output if it perceives a positive marginal profit and decreasing its production if the perceived marginal profit is negative.
The parcel express duopoly of FedEx and UPS each rolled out their respective 2017 rate increases last month for ground, international, LTL and air.
Their manager, with the hardest duopoly in world football to crack, has led Atletico to five trophies in the past four seasons and was an injury-time equaliser away from winning the Champions League.
Plaid Cymru leader Leanne Wood told the conference her party hope to emulate the SNP's success and break the Labour and Tory "duopoly" in Wales.
Offering big-screen, slick, slim smartphones at lower prices, Chinese manufacturers Huawei, ZTE and Lenovo will leverage the Mobile World Congress to chip away at the mighty duopoly, analysts say.