Duopoly

By:

James Knight

James is a lead editor for Invezz, where he covers topics from across the financial world, from the stock… read more.

Updated: Aug 20, 2021

Ad disclosure

Invezz is an independent platform with the goal of helping users achieve financial freedom. In order to fund our work, we partner with advertisers who compensate us for users that Invezz refers to their services. While our reviews and assessments of each product on the site are independent and unbiased, brands may pay to appear higher up our table rankings or place ads in specific areas of the site. The order in which products and services appear on Invezz does not represent an endorsement from us, and please be aware that there may be other platforms available to you than the products and services that appear on our website. Read more about how we make money >

The market situation in which there are only two seilers of a particular good or services. The essence of this situation is that the actions of one seller affect the position of the other and will induce some sort of response from him. Each firm cannot then predict the precise conseq uences of i ts own actions unless it can also predict the reaction of its competitor. This is the characteristic problem of oligopoly in an acute and simplified form, so the duopoly mode! was often used to analyse oligopolistic situations. Without assuming something about the reactions of the two firms in vol ved, it is impossible to find a determinate equilibrium solution in the market. However, one problem is that there is a range of possible assumptions which could be chosen and which generally give different results.

Reference: The Penguin Dictionary of Economics, 3rd edt.