A true duopoly (from Greek dyo / δυο (two) + polein / πωλειν (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
There are two principal duopoly models, Cournot duopoly and Bertrand duopoly:
- The Cournot model, which shows that two firms assume each others 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.
Modern American politics has been described as a duopoly 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:
- Moody's and S&P in the Ratings market
- Pepsi and Coca-Cola in the soft drink market
- Gillette and Wilkinson Sword/Schick in the razor blade market
- Airbus and Boeing in the commercial large jet aircraft market
- Marvel Comics and DC Comics in the comic books market
- Intel and AMD in the consumer desktop computer microprocessor market
- The local cable company and the local telephone company in residential broadband Internet access
- Analogue mobile phone service (1983–2008) assigned bandwidth for just two carriers (A/B); in much of North America these effectively were "Alternate" and "Bell" (or the incumbent regional telephone landline monopoly in the area). Windsor-Detroit was very adversely affected by this spectrum allocation limitation.
- The Home Depot and Lowes in the American retail home improvement market.
- Kodak and Fujifilm in motion picture film stock and color 135 film markets
- K-Kauppa and S-Group in the Finnish supermarket market (jointly they control 75% of supermarket market)
- Foodstuffs and Progressive Enterprises in the New Zealand supermarket market (jointly they control 90% of supermarket market)
- Woolworths and Coles in the Australian supermarket market (share 79% of the supermarket market)
- Nvidia and the ATI subsidiary of Advanced Micro Devices in the mainstream graphics card market.
- LexisNexis and Westlaw in legal research; the two companies together have been jokingly referred to as Wexis
- PetroChina and Sinopec in Chinese oil production.
- Pakistan State Oil (PSO) and Shell Pakistan in white oil products in Pakistan (share almost 90% of the white oil market in the country)
- Rai and Mediaset in the Italian television market.
- Telstra and Optus in the Australian Telecoms market.
- Dish Network and DirecTV in the U.S. satellite provider market.
- Televisa and Azteca in the Mexican multimedia market. (jointly they control 95% of the multimedia market)
- Handango and Motricity in mobile content retailing market.
- Migros and Coop in Swiss retail food market.
- FedEx and UPS in the United States express small package delivery industry.
- MillerCoors and Anheuser-Busch in the United States Domestic beer market.
- Canon and Nikon in high end imaging optics, film and digital cameras (especially in DSLRs)
- Kleenex and Puffs in facial tissues.
- RTM and Media Prima in Malaysia's free-to-air TV station market.
- Starhub and Singtel in Singapore's cable television market.
- SMRT Corporation and SBS Transit in Singapore's Transport
- Verizon and AT&T in the U.S. telecommunications market.
- GeoEye and DigitalGlobe in the U.S. satellite imaging 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).
- Leitner-Poma and Doppelmayr CTEC in the chairlift industry.
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 Zain in Kenya are perfect examples of Duopoly market in 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.usdoj.gov/atr/cases/f1900/1973.htm
- ^ http://mit.edu/thistle/www/v12/2/credit.html
- ^ http://news.bbc.co.uk/1/hi/business/4014599.stm
- ^ 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
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