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Economics

Study Notes

Duopoly

Level:
A Level
Board:
AQA, Edexcel, OCR, IB

Duopoly is a form of oligopoly. In its purest form two firms control all of the market, but in reality the term duopoly is used to describe any market where two firms dominate

Examples of duopolistic markets: There are many examples of duopoly including the following:

  • Coca-Cola and Pepsi (soft drinks), Unilever and Proctor & Gamble (detergents)
  • Bloomberg and Reuters (Financial information services), Sotheby's and Christie's (auctioneers of antiques/paintings)
  • Airbus and Boeing (aircraft manufacturers)
  • US diesel locomotive market is a duopoly of General Electric's GE Transportation and Caterpillar's EMD
  • Glencore and Trafigura form a duopoly that controls as much as 60 per cent of some markets, such as zinc
  • Construction and maintenance of UK road and rail networks is largely undertaken by two companies Carillion and Costain

In these imperfectly competitive markets entry barriers are high although there are usually smaller players in the market surviving successfully. The high entry barriers in duopolies are usually based on one or more of the following: brand loyalty, product differentiation and huge research economies of scale.

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