duopoly

noun

du·op·o·ly | \du̇-ˈä-pə-lē also dyu̇-

plural duopolies

Definition of duopoly

1 : an oligopoly limited to two sellers

2 : preponderant influence or control by two political powers

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The digital duopoly’s closest competitors in the online-ad market, Amazon and Microsoft , also have online payment systems and ban cryptocurrency promotions. — Mark Epstein, WSJ, "Google’s and Facebook’s Dubious Bitcoin Bans," 25 June 2018 That style has seen the club win multiple Europa League titles under the Argentine coach, reach the Champions League final twice and even briefly break the Real Madrid-Barcelona duopoly that has existed in La Liga for well over a decade. — SI.com, "Antoine Griezmann Admits France Played Like Atletico Madrid After Bore Draw vs Denmark," 27 June 2018 Fearful of a political backlash provoked by the Facebook scandal, companies that do not depend on advertising are trying to distance themselves from the online ad duopoly. — The Economist, "Big tech is growing, but so is investors’ caution," 26 Apr. 2018 The tie-up bolsters the duopoly held by Boeing and Airbus as competitive threats emerge from rivals in Russia, Japan and China. — Julie Johnsson And Fabiola Moura, chicagotribune.com, "Boeing's $4.75 billion Embraer deal leaves long to-do list," 6 July 2018 The tie-up caps years of talks between the two, while extending the duopoly held by Boeing and Airbus as competitive threats emerge from rivals in Russia, Japan and China. — Fabiola Moura, latimes.com, "Boeing takes control of Embraer's commercial jet business in $4.75-billion deal," 5 July 2018 The tie-up caps years of talks between the two, while extending the duopoly held by Boeing and Airbus as competitive threats emerge from rivals in Russia, Japan and China. — Fortune, "Boeing and Embraer Are Forming a $4.75 Billion Commercial Jet Venture," 5 July 2018 But this World Cup is a moment to concede the obvious: The duopoly of Cristiano Ronaldo and Lionel Messi that has ruled the global game for the last decade is in its late era. — Franklin Foer, The Atlantic, "The Annoying Genius Who Makes the World Cup Worth Watching," 5 July 2018 Beginning with Craigslist—and culminating with an online ad duopoly controlled by Facebook and Google—the newspaper business model was rapidly disrupted. — Alex Shephard, The New Republic, "Finance Is Killing the News," 18 Apr. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'duopoly.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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15 Oct 2018

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The first known use of duopoly was in 1920

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More Definitions for duopoly

duopoly

noun

Financial Definition of duopoly

What It Is

A duopoly is a form of oligopoly occurring when two companies (or countries) control all or most of the market for a product or service.

How It Works

There are two kinds of duopolies. In the first, the Cournot duopoly, competition between the two companies is based on the quantity of products supplied. The duopoly members essentially agree to split the market. The price each company receives for the product is based on the quantity of items produced, and the two companies react to each other's production changes until an equilibrium is achieved.

In a Bertrand duopoly, the two companies compete on price. Because consumers will purchase the cheaper of two identical products, this leads to a zero-profit price as the two competitors attempt to attract more customers (and thus more profit) through price cuts. The threat of price undercutting means that Bertrand equilibrium prices and profits are generally lower (and quantities higher) than in Cournot duopolies.

Why It Matters

A duopoly forces each producer to carefully consider its rival's potential reactions to certain business decisions. When members of a duopoly compete on price, they tend to drive the product's price down to the cost of production, thereby lowering profits for both members of the duopoly.

These circumstances give duopolists a strong incentive to agree to charge a monopoly price and share the resulting profits. However, federal antitrust laws, most notably the Sherman Act, make collusive activity illegal in the United States. Additionally, each member of a duopoly still has an incentive to compete, even while colluding with the competition. An undetected price adjustment will attract customers who are buying from the competition and customers who are not buying the product at all. Price adjustments may be subtle, including better credit terms, faster delivery, or related free services.

Duopolies are most effective when the demand for the duopoly's product is not greatly affected by price. This is also why duopolies are more effective in the short term; over the long term, prices often become more elastic as consumers find substitutes for the product. Also, demand volatility may lead to disagreements within a collusive duopoly regarding outputs and prices.

Source: Investing Answers