Group 6

Understanding Duopoly
A Competitive Market Structure

Definition
A duopoly is a market structure in which only two firms
or producers control all or most of the market share.
The word duopoly comes from the Greek words for “two”
and “to sell”.
A duopoly is a specific form of oligopoly

Characteristics
Two large firms The level of competition
dominating the market may be fierce

Producers have a high

Entry barriers are high
strategic dependence

Chances of collusive Economies of scale are

behaviors are high high

Examples

TYPES
Cournot Duopoly - Antoine Cournot, a French mathematician and
philosopher. Quantity determines market competition and, thus, the output of
competition

Bertrand Duopoly - Joseph Bertrand, a French mathematician and

economist. Price is a determining factor for competition, not the quantity of a
output

Implications for Competition

Competition outcomes depend on the strategies adopted by each company

Competition through price:

Competition through quantity
Competition through quality

PROS
The two companies benefit by
cooperating to improve benefits.
Companies do not have to constantly
engage in fruitless competition.
Prices may be controlled by the rivalry
between the two companies
CONS
Free market trading and the
entrance of new companies are
restricted.
Industry innovation and progress
can be curtailed.
Consumers have limited option

Ywayan Mangubat
Pahugot Brigoli
Amistad