Duopoly - Definition and Overview

A duopoly is a form of oligopoly where only two producers are present in a given market. In the field of industrial organization, it is most commonly studied form of oligopoly due its simplicity.

Duopoly Models in Economics

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

• The Cournot model, which shows that two firms react to one another's production (quantity) changes until they reach a Nash equilibrium.
• 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.

Politics

Modern American politics has been described as a duopoly since the Republican and Democratic parties have dominated and framed policy debate. They have worked hard to exclude third parties from many ballots, and have shaped, by default, matters of national concern for about a century and a half.

See List of political parties in the United States for a more comprehensive look at the politics of the Two-party system, Duverger's law.

The term is also used in the broadcast television and radio industry, referring to a single company owning two outlets in the same city. In the United States, this has been frowned upon when using public airwaves, as it gives too much influence to one company.

Links

Duopoly Theory (http://www.economyprofessor.com/economictheories/duopoly-theory.html)