D U O P O LY

By
Lakshitha
Aryan R
Mrudula
Naman
Prerana
MEANING
• A duopoly is a situation where two companies together own all, or nearly all, of the
market for a given product or service.

• Duopoly is a type of oligopoly, where two companies or forms virtually control market for
goods and services they sell.

• Examples:Coca-Cola and Pepsi in the soda industry is example of duopoly in the market.
F E AT U R E S
• The features of Duopoly are as follows:
1. There are only two companies that share the market.
2. Both businesses that exist within a duopoly are interdependent. To win the attention of
customers, companies often take strategic actions, such as price reductions.

3. Companies in a duopoly take different measures to develop brand and implement low-
pricing strategies, it’s hard for new firms to enter. As a result, sales volume and
revenues are good enough because there is only one competitor and the barriers to
entry are high.
TYPES OF
D U O P O LY
• The Cournot duopoly model states that the
quantity of goods or services produced
structures the competition among the two
companies in an industry.(50/50 split). If any
one firm alter production capacity, then other
form will also do so.
• The Bertrand duopoly model states that it is
price and not production quantity that
structures the competition between the two
firms. The model posits that consumers will
choose the lower-priced product when given
two choices of equal quality. This implies that
the two companies in the duopoly will engage
in a price war to gain market share.
GRAPH
CASE STUDIES

• Indian food ordering and delivery giants Swiggy and Zomato may
encounter an inquiry over anti-competitive activities as the National
Restaurants Association of India (NRAI) recently filed a complaint
against the duo with the competition watchdog, the Competition
Commission of India (CCI).
Since 2018, restaurants in India have been vociferous in their objections
about Swiggy and Zomato business practices in India. In early 2019,
NRAI raised a red flag and communicated to the CCI about Zomato and
Swiggy mishandling their leading titles.
OLA AND UBER
DIFFERENCES

Duopoly Perfect Competition

• Two dominant firms: A Duopoly consists of only two • Many small firms: Many small firms operate in
major firms dominating the market. the market.
• Limited competition: Restricted competition due to • Homogeneous products: Products are identical
the small number of firms. among different firms.
• Strategic interactions: Firms engage in strategic • Price taker: Firms are price-takers with no
actions that affect each other's decisions. influence over prices.
• Price interdependence: Pricing decisions by one
• Free entry and exit: Firms can quickly enter or
firm influence the other.
exit the market.
• Product variation: Products can be homogeneous or
•
differentiated, depending on the industry.
•
DIFFERENCES

Duopoly Monopoly
• Two dominant firms: A Duopoly consists of only two major firms • Single seller: Monopoly features a single dominant seller or
dominating the market. firm in the market.
• Limited competition: Restricted competition due to the small
number of firms.
• Unique product: The monopolist offers a unique product
with no close substitutes.
• Strategic interactions: Firms engage in strategic actions that
affect each other's decisions. • Price maker: The monopoly has significant control over
setting prices.
• Price interdependence: Pricing decisions by one firm influence
the other. • Barriers to entry: High barriers to entry prevent other firms
• Product variation: Products can be homogeneous from entering the market.
or differentiated, depending on the industry.
• Market power: The monopolist has substantial market
• power, often resulting in higher prices.
•
DIFFERENCES

Duopoly Pure Competition

• Two dominant firms: A Duopoly consists of • There are a large number of firms.
only two major firms dominating the market.

• Limited competition: Restricted competition due • As there are large number of sellers and
to the small number of firms. sell same product they don't have
• Strategic interactions: Firms engage influence on the price.
in strategic actions that affect each other's decisions.
• There is no much product variation.
• Price interdependence: Pricing decisions by
one firm influence the other.

• Product variation: Products can be

ii. The two companies compete with each other, the consumer benefits because prices are controlled to some extent and
do not become monopoly prices.

Disadvantages:
i. Duopolies are that they limit free trade.
ii. With a duopoly, the supply of goods and services lacks diversity, and there are limited options for consumers.
• The absence of competitors in a duopoly stifles innovation. With a duopoly, prices may be higher for consumers when the
competition is not driving prices down.

i.
A D V E R T I S I N G S T R AT E G I E S
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