of a duopoly
A duopoly is an economic market structure in which two producers dominate the market, having a significant influence and control over the market prices and production Generally, a duopoly is the result of two companies merging and merging their resources to produce the same output. This type of market structure is characterized by a lack of competition, higher prices, and lower quality products.
A duopoly can be identified through various indicators, including the presence of two dominant firms, large market shares, and limited entry by other potential firms. Depending on the type of market, some factors need to be taken into account when assessing a duopoly, such as the cost of production, the demand for the product, capital availability, technology, and the costs of entry for new competitors.
Duopolies have been widely studied in economics, with some of the most famous contributions coming from Neo-Classical models. The Neo-Classical models assume that duopolies arise from an initial duopoly structure or from a gradual consolidation process. It also assumes that the two firms have no incentive to cooperate and will compete with each other to maximize their profits. In this model, the market will reach a Nash equilibrium, characterized by the two firms setting price and production levels in order to maximize their profits.
The best examples of a duopoly are the two firms that dominate the market: Coca Cola and Pepsi. These two firms have had a long history of competition and have grown to become the two dominant firms in the carbonated drinks market. They have also been able to use their market power to shape the market, as well as gain “first mover” advantages in terms of product design, advertising, and marketing. Similarly, Microsoft and Apple have a duopoly in the computer industry. Microsoft dominates the desktop computer software market, while Apple dominates the mobile device market.
Other examples of duopolies include AT&T and Verizon in the telecommunication market, Visa and Mastercard in the credit card processing market, and Google and Bing in the search engine market. These are all highly competitive markets, but two firms dominate the market by controlling prices, quality, and innovation.
Finally, Amazon and Walmart have recently emerged as a duopoly in the retail market, using their combined size, power, and presence to drive prices down and influence the market. They have also used their market power to gain advantages in terms of product range, delivery times, and customer service.