Duopoly
Duopoly Meaning
Duopoly refers to a marketplace state of affairs in which some dealers move directly to very own all or own almost all the complete marketplace proportion for the product or service.
Types of Duopoly
The following are the 2 forms of duopoly.
#1 – Cournot Duopoly
Under this Cournot Duopoly model, it’s far assumed that the gamers might make an association to divide the marketplace into 1/2 of after which proportion it. Emphasis is laid on the range of products that might be produced indicating that that is what might form the opposition between the two firms.
#2 – Bertrand Duopoly
Cournot believed that it turned into the amount that might pressure the opposition among the two corporations while Bertrand might continually move directly to accept as true with that it’d be the price. Consumers might continually select the business enterprise that gives a decrease price.
Benefits of Duopoly Below is how duopoly benefits the business.
Unlike a monopolistic business where a single player dominates the market and enjoys maximum market share leaving consumers little or no choice between better products, competition since the duopoly tends to put an end to this practice and offer a better choice to customers. One player tends to be better than the other.
A small mistake, a wrong decision or a delay in adopting some updated trends or practices can lead to huge losses. With a duopoly, each player tries to be better than the other, there is competition at every stage, whether it is innovative products, services or even a wide range of products at lower prices, a certain efficiency develops in the company and the consumers will also benefit from it.
Due to little competition, participating players have the opportunity to make maximum profit from the products they sell. Companies will be able to generate significantly higher profits for themselves. Consumers would end up choosing one of the 2 companies and therefore there is an opportunity for them to be an undisputed leader in the market therefore they tend to generate the maximum profit by having to sell their products and services.
Marketplaces tend to be simpler for consumers because they don’t have to spend time and energy choosing between multiple products from different brands by researching and shopping. necessary comparisons. They know the top 2 players in the vertical very well and end up buying from one of them. They don’t have to worry about having to search through many other options to choose the best product or service that would meet their needs.
It often happens that the barriers to entry are high and therefore firms can be brought to improve, use and exploit their power to the maximum, thus extracting the maximum profit from the market. Small businesses can find it very difficult to enter the market. Thus, from the point of view of large companies, the duopoly represents an excellent opportunity for them to have strong market power and establish themselves.
Disadvantages of Duopoly
The following is an indication of how a duopoly tends to have certain disadvantages.
Most of the time, due to the high barriers to entry, small businesses find it difficult to enter the market. They wouldn’t stand a chance against the majors that currently dominate the market. Thus, small businesses would tend to have no choice but to continue to relax in the long term due to the high competition in the market.
Thus, duopoly emerges as a threat to small businesses and to any enthusiastic new or historic entrepreneur attempting to enter these markets. The strong presence naturally discourages competition for other market members.
Undoubtedly, there is simplicity and consumers do not have much difficulty in choosing the products. However, consumers have no choice but to accept one of the 2 brands available. There is a dearth of options for consumers to choose from. There may be a latent consumer need that existing brands fail to notice and satisfy, thus leaving consumers with the only choice that accepts the products that duopoly players have to offer in the market.
In the case of a duopoly, market players can sometimes end up colluding to their advantage. A collusion is an act by participants aimed at upsetting the market equilibrium to their advantage. They act in secret by deceiving and even defrauding others to retain their market share. They can, in synchronization, try to raise the prices of the products they sell to make the most of these actions. Consumers are distraught, as are new small businesses wanting to enter the market because their chances of survival are drastically reduced.
Conclusion
Duopoly markets due to the existence of only 2 players in the market would give them an advantage in terms of market share, thus excluding the rest, especially new players trying to enter the market. Consumers also have few options when it comes to entering the market. However, if companies provide quality products to consumers and do not take collusive positions, there will undoubtedly be a balance in the market.
