Duopoly

Business, Legal & Accounting Glossary

Definition: Duopoly


Quick Summary of Duopoly


A situation in which two suppliers dominate the market for a commodity or service.




What is the dictionary definition of Duopoly?

Dictionary Definition


  1. economics A market situation in which two companies exclusively provide a particular product or service.
  2. by extension The domination of a field of endeavour by two people or entities.
  3. broadcasting, by extension Situation in which two or more TV or radio stations in the same city or community share common ownership.

Full Definition of Duopoly


duopoly is a market condition in which two companies producing a similar type of product have control over the market. This is similar to monopolies in which only one company controls the market and oligopolies in which multiple companies are allowed to trade in the market.

The duopoly theory looks at the interplay of two companies in a market: each firm’s prices and production are set by the decisions of the other.

Webster defines duopoly as, an oligopoly limited to two sellers.

The concept of a duopoly was proposed by French economist Antoine Augustin Cournot (1801-1877).

Models

In economics, duopolies are categorized into two primary models. These are described below:

  • The Bertrand model – In this model, neither of the two-game firms change prices consequent to the price cut of the other firm. Using this principle, the two firms can reach the Nash Equilibrium in which both firms are aware of the strategies of the other firm.
  • The Cournot model – According to this model, both the firms assume the output of the other and consider it as fixed. The production of the firm is determined in accordance with this fixed amount.

Examples

The most popular example of a duopoly is between Visa and Mastercard who exercise a major control over the electronic payment processing market in the world. Pepsi and Coca-cola are the two major shareholders in the soft drinks market. Airbus and Boeing are duopolies in the commercial jet aircraft market.


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Definition Sources


Definitions for Duopoly are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 6th April, 2020 | 10 Views.