Duopoly

For other uses, see Duopoly (disambiguation).

A duopoly (from Greek δύο, duo (two) + πωλεῖν, polein (to sell)) is a form of oligopoly where only two sellers exist in one market. In practice, the term is also used where two firms have dominant control over a market., it is the most commonly studied form of oligopoly due to its simplicity.

Duopoly models in economics and game theory

There are two principal duopoly models, Cournot duopoly and Bertrand duopoly:

• 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.

Characteristics of duopoly

1. Existence of only two sellers

2. Independence

3. Presence of monopoly elements: so long products are differentiated, the firms enjoy some monopoly power, as each product will have some loyal customers

4. There are two popular modes of duopoly, i.e., Cournot’s Model and Chamberlain’s Model.

Politics

See also: Two-party system

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, such as denial of access to general election debates.

Examples in business

A commonly cited example of a duopoly is that involving Visa and MasterCard, who between them control a large proportion of the electronic payment processing market. In 2000 they were the defendants in a U.S. 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 Azteca in the Mexican Television market.
• RAI and Mediaset in the Italian Television market.
• Radio Televisyen Malaysia and Media Prima in the Malaysian Television market.
• Air Canada and WestJet in the Canadian Aviation 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).
• Intel and AMD in X86 CPU market and Nvidia and AMD in consumer and professional PC GPU market.
• The BNSF Railway and Union Pacific Railroad have a duopoly on freight rail traffic in the Western United States.
• Norfolk Southern Railway and CSX Transportation operate a duopoly on freight rail traffic in the Eastern United States.
• Apple and Microsoft in the electronics industry.
• Apple's iOS and Google's Android in the mobile operating system market.
• Globe Telecom and Smart Communications in the Philippine Telecomunnications industry.
• First American Financial Corporation and Fidelity National Financial in the American title insurance sector.
• DC Comics and Marvel Comics in the superhero genre.
• Varian Medical Systems and Elekta in the radiotherapy device industry.
• Pepsi and Coca-Cola in carbonated drinks market.
• Visa Electron and MasterCard in electronic payment processing market.
• Du and Etisalat in the United Arab Emirates telecom space.

Media

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.

Broadcasting

Main article: Duopoly (broadcasting)

Duopoly is also used in the United States broadcast television and radio industry to refer to a single company owning two outlets in the same city.

This usage is technically incompatible with the normal definition of the word and may lead 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".

See also

• Monopoly
• Two-party system