what is a duopoly 
a duopoly is a situation where two companies together own all or nearly all of the market for a given product or service a duopoly is the most basic form of oligopoly a market dominated by a small number of companies a duopoly can have the same impact on the market as a monopoly if the two players collude on prices or output understanding a duopolyin a duopoly two competing businesses control the majority of the market sector for a particular product or service they provide a business can be part of a duopoly even if it provides other services that do not fall into the market sector in question for example google and meta formerly facebook have dominated digital advertising for much of the 21st century and function as a duopoly in that field but google is not associated with a duopoly in its other product sectors such as computer software a duopoly is a form of oligopoly and should not be confused with a monopoly where only a single producer exists and controls the market with a duopoly each company will tend to compete against the other keeping prices lower and benefiting consumers however since there are only two major players in an industry under a duopoly there is some likelihood that a monopoly could be formed either through collusion between the two companies or if one goes out of business in a duopoly oligopoly or monopoly the parties involved may collude and use their power to inflate prices since it results in consumers paying higher prices than they would in a truly competitive market collusion is illegal under u s antitrust law 1a duopoly is a particular type of oligopoly an oligopoly exists when a few businesses control the vast majority of the market sector while a duopoly qualifies as an oligopoly not all oligopolies are duopolies for example the automobile industry is an oligopoly because there are a limited number of producers but more than two who must respond to worldwide demand duopoly vs duopsonya duopoly should not be confused with a duopsony in a duopoly two competing businesses control the majority of the market sector for a particular product or service they provide for example coca cola and pepsi represent a duopoly because the two firms control almost the entire market for cola beverages a duopsony however is an economic condition whereby there are only two large buyers for a specific product or service the buyers thus have considerable bargaining power and can determine market demand as long as there are plenty of firms vying to sell to them intel corp intc and advanced micro devices inc amd are an example of a duopsony combined they command nearly 100 of sales in the computer processing chip market and have substantial influence over their suppliers duopsony is also known as a buyer s duopoly and is related to oligopsony a term describing a market where there are a limited number of buyers advantages and disadvantages of a duopolyduopolies can have both positive and negative effects on the companies in the duopoly and the consumer first the two companies can cooperate with each other and maximize their profits as there are no other competitors in other words there is a collusive cooperative equilibrium the companies in a duopoly can concentrate on improving their existing products rather than feeling pressure to create new products for the market because the two companies compete with each other the consumer benefits because prices are controlled to some extent and do not become monopoly prices the disadvantages of duopolies are that they limit free trade with a duopoly the supply of goods and services lacks diversity and there are limited options for consumers also it is difficult for other competitors to enter the industry and gain market share 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 price fixing and collusion can occur in duopolies which means consumers pay more and have fewer alternatives the two companies benefit by cooperating to improve profits companies do not have to constantly engage in fruitless competition or worry about disruptors prices may be controlled by the rivalry between the two companies free market trading and the entrance of new companies are restricted industry innovation and progress can be curtailed consumers have limited options price fixing and collusion may cost consumers more examples of duopolyboeing and airbus have been considered a duopoly for their command of the large passenger airplane manufacturing market similarly apple and samsung dominate the smartphone market while there are other companies in the business of producing passenger planes and smartphones the market share is highly concentrated between the two businesses identified in the duopoly visa v and mastercard ma are considered a duopoly the two financial powerhouses own over 80 of all european union card transactions this dominance has led the european central bank ecb to try to find ways to break up the duopoly so far the ecb has tried interchange fee caps but a new scheme that would allow instant payments using national payment cards across european countries could be a game changer 2a european infrastructure for instant payments would eliminate the need for people to use the global services of visa or mastercard another suggestion is to allow instant payments at points of interaction or points of sale so that the need for the traditional cards would disappear altogether the bottom linethere are plenty of examples of duopolies in today s markets coca cola and pepsi in the soda industry and apple and samsung in the smartphone industry are two of them duopolies are a form of oligopoly and the biggest disadvantage of duopolies oligopolies and monopolies is that the companies involved can dominate markets collude with each other and raise prices for the consumer 