Duopoly
A duopoly is a situation where two companies together own all, or nearly all, of the market for a given product or service. A duopoly is the most basic form of oligopoly, a market dominated by a small number of companies. A duopoly can have the same impact on the market as a monopoly if the two players collude on prices or output.
Duopoly
Definition
A duopoly refers to a market structure where two companies collectively hold the entire or nearly the entire market share of a particular product or service. This is a basic form of oligopoly, where the market is dominated by a few companies. If the two players collude on price or output, a duopoly can have the same market impact as a monopoly.
Origin
The concept of duopoly originates from the theory of oligopoly in economics. The theory of oligopoly was first proposed by French economist Augustin Cournot in the 19th century, who used mathematical models to analyze how a few companies compete in the market. With the development of market economies, duopoly has become an important subject in the study of market structure and competitive behavior.
Categories and Characteristics
Duopolies can be divided into two main types: cooperative duopoly and non-cooperative duopoly.
- Cooperative Duopoly: In this case, the two companies cooperate through agreements or tacit understandings to jointly decide on prices and output to maximize their profits. This cooperation can lead to higher market prices and reduced consumer choices.
- Non-Cooperative Duopoly: In this case, the two companies make independent decisions and compete with each other. Although competition may lead to lower prices, prices may still be higher than in a perfectly competitive market due to the concentrated market share.
Specific Cases
Case 1: Coca-Cola and PepsiCo
In the global soft drink market, Coca-Cola and PepsiCo almost hold the entire market share. Although these two companies compete fiercely in advertising and products, there are instances of price tacit agreements in certain markets.
Case 2: Boeing and Airbus
In the large commercial aircraft market, Boeing and Airbus are the two major players. They compete intensely in technology development and market promotion but also collaborate on developing new technologies.
Common Questions
Q: How does a duopoly affect consumers?
A: A duopoly can lead to higher prices and reduced choices, especially in the case of a cooperative duopoly.
Q: How can a duopoly be identified in a market?
A: A duopoly can be identified through market share analysis and price behavior observation. If two companies hold a large market share and exhibit similar price behaviors, a duopoly may exist.
