A true duopoly (from Greek duo δύο (two) + polein πωλεῖν (to sell)) is a specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market. In the field of industrial organization, it is the most commonly studied form of oligopoly due to its simplicity.
Duopoly models in economics
- The Cournot model, which shows that two firms assume each other's output and treat this as a fixed amount, and produce in their own firm according to this.
- The Bertrand model, in which, in a game of two firms, each one of them will assume that the other will not change prices in response to its price cuts. When both firms use this logic, they will reach a Nash equilibrium.
- An example would be Pav Pooni with Chandni Chowk in the infamous Gulaab Jamun
Modern American politics, in particular the electoral college system has been described as duopolistic since the Republican and Democratic parties have dominated and framed policy debate as well as the public discourse on matters of national concern for about a century and a half. Third Parties have encountered various blocks in getting onto ballots at different levels of government as well as other electoral obstacles, more so in recent decades.
Examples in business
The most commonly cited duopoly is that between Visa and Mastercard, who between them control a large proportion of the electronic payment processing market. In 2000 they were the defendants in a US Department of Justice antitrust lawsuit. An appeal was upheld in 2004.
Examples where two companies control a large proportion of a market are:
- Airbus and Boeing in the market for large commercial airplanes. See also: Competition between Airbus and Boeing.
- Televisa and TVAzteca in the Mexican Television market.
- Woolworths and Coles in the Australian supermarket market (share 79% of the supermarket market)
- Mitre 10 MEGA and Bunnings Warehouse in the Australian and New Zealand retail/trade timber and hardware market (Share 85% of the timber and hardware market).[not in citation given]
- Intel and AMD in X86 CPU market and Nvidia and AMD in consumer and professional PC GPU market.
- Norfolk Southern Railway and CSX Transportation operate a duopoly on freight rail traffic in the Eastern United States.
In Finland, the state-owned broadcasting company Yleisradio and the private broadcaster Mainos-TV had a legal duopoly (in the economists' sense of the word) from the 1950s to 1993. No other broadcasters were allowed. Mainos-TV operated by leasing air time from Yleisradio, broadcasting in reserved blocks between Yleisradio's own programming on its two channels. This was a unique phenomenon in the world. Between 1986 and 1992 there was an independent third channel but it was jointly owned by Yle and MTV; only in 1993 did MTV get its own channel. Safaricom mobile service provider and Airtel in Kenya are perfect examples of Duopoly market in the African telecommunication industry.
This usage is technically incompatible with the normal definition of the word and leads to confusion, inasmuch as there are generally more than two owners of broadcast television stations in markets with broadcast duopolies. In Canada, this definition is therefore more commonly called a "twinstick".
- http://www.weeklytimesnow.com.au/article/2008/11/03/20101_latest-news.html Weeklytimesnow.com.au - Coles, Woolworths still dominate
- http://www.insideretailing.com.au/Default.aspx?tabid=53&articleType=ArticleView&articleId=3709 Insideretailing.com.au Some positive signs in the Coles businesses under Wesfarmers
- Kramer-Miller, Ben (June 25, 2013). "Norfolk Southern Corp. Looks Like A Solid Investment". Seeking Alpha. Retrieved October 7, 2014.