Duoploy
- What does duopoly mean?
According to the publication investing answers, the actual meaning for duopoly as a whole states that, ' duopoly is a form of 'oligopoly' occurring when two companies (or countries) control all or most of the market for a product or service.'
There are two different types of duopoly.
1) 'Cournot duopoly', defines the competitions between the two companies is based on the quantity and supply. Duopoly involves two companies agreeing to slip the market.'
2) 'Bertrand duopoly', is associated when two companies compete on prices. Because consumers will prefer a cheaper alternative between similar products, 'this leads to zero profit price as the two conpetitors attempts to attract more customers and produce more profit through cut price. The threat of price cutting means that 'Bertrand equilibrium prices and profits are generally lower (and quantities higher) than in 'courtnot duopolies'. (Investing answers 2014, duopoly, viewed 19th of March 2014, <.. >)
- What I'd the purpose of duopoly?
A duopoly is a market power that forces each manufactuturer to strategically consider its competitors potential reaction to particular business decisions when the manufacturer of the duopoly completes on prices, they trend to drive the companies product prices down to the cost of production.
These situation give duopoly companies an effective motivation to agree to change a 'monopoly' price and share the resulting profit. It is stated that duopoly are most effective when consumer demanded for the product is not greatly affected by price. Furthermore, duoplies are more effective on the short term, as over a long term, prices often become more elastic as consumers finds another alternative for the product. Ho...
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...utting down prices to attract comsumers will increase demand of consumers as consumers are paying less for groceries. However, Woolworth and Coles are a using their market power of keeping a constant competitive environment amongst other supermarkets such as Aldi and Costco.
Advantages of duopoly
-The advantages of duopoly in supermarkets is it portrays close competitions for other supermarkets.
-The competition of prices is direct to other producers such as Woolworth and Coles offering better prices to its comsumers.
Disadvantage of duopoly
- Two huge corporations in one market will make it very difficult for smaller firms to gain recognition or a market share. This means many new firms out before they are able to generate any new
- It's competitive environment will make it harder for other companies to develop more products and keep up with its competitors.
They anticipate competition between supermarket chains will be fierce this year as food prices continue to stay low. The Canadian grocers have been grappling with declining food prices, especially for meat, and Loblaw’s said “The notion of a shift into a steady inflationary environment is going to be offset by what we see as a continued level of competitive intensity”
Along these lines, the state of perfect competition that items must be indistinguishable from firm to firm is not met. The restaurant, apparel and shoe commercial ventures all display monopolistic competition. Firms inside those businesses endeavors to cut out their own particular sub industries by offering products or services not copied by their rivals. From numerous points of view, monopolistic competition is nearer than oligopoly to perfect competition. Boundaries to section and exit are lower, singular firms have less control over business sector costs and purchasers, generally, are learned about the contrasts between firm’s products. Monopoly and oligopoly are counterpoints to monopoly and oligopoly. Rather than being comprised of numerous purchasers and couple of buyers. These extraordinary markets have numerous dealers however couple of purchasers. The resistance business in the U.S. constitutes a monopoly; numerous organizations make products and services and endeavors to offer them to a particular purchaser, the U.S. military. A case of an oligopoly is the tobacco
This company is known to be a monopolistically competitive, because there are still many firms and consumers, just as in perfect competition, but they still have control over what price they charge in their company, because Ben and Jerry's ice cream is differentiated from the other ice cream companies and they provide a lot of non price competition which will be mentioned later in the paper.
Because there are few firms in an oligopoly industry, each firms output is a large share of the market. As a result, each firm's pricing and output decisions have a substantial effect on the profitability of other firms. In addition, when making decisions relating to price or output, each firm has to take into consideration the likely reaction of rival firms. Because of this interdependence, oligopoly firms engage in strategic behaviour. Strategic behaviour means when the best outcome of a firm is determined by the actions of other firms.
It is a well-known fact that every firm wants to be successful in its business. Sometimes it is difficult to decide what kind of actions to take in order to achieve it. Especially, it is hard on oligopoly market because this is one of the most complicated market structures. Oligopoly includes many models and theories such as duopoly where are just two producers and which pricing decisions remind monopoly, kinked demand curve, which decreases economic profit, and cartel, which brings economic profit just for the short-run. However, to be a successful oligopolistic firm in the long run, managers should include in the planning process such economic theories and models as producer interdependence, the prisoner’s dilemma, price leadership, nonprice adjustments, and correct using of barriers to entry.
Topic A (oligopoly) - "The ' An oligopoly is defined as "a market structure in which only a few sellers offer similar or identical products" (Gans, King and Mankiw 1999, pp.-334). Since there are only a few sellers, the actions of any one firm in an oligopolistic market can have a large impact on the profits of all the other firms. Due to this, all the firms in an oligopolistic market are interdependent on one another. This relationship between the few sellers is what differentiates oligopolies from perfect competition and monopolies.
Monopoly is when a business or a single company owns nearly all its market for a given type of product and services. There is no competition in monopoly and the price of a specific product is set by the monopoly itself. Therefore, a monopoly's price is the market price and demand are market demand; the firm and the industry are the same. It can charge higher prices at any output consequently, consumers will not be able to substitute the good or service with a more affordable alternative. Monopoly’s soul goal is to make profit at any price and quantity. Still to this day, monopolies do exist but at a smaller scale.
Rivalry among established firms is fierce. There are several factors that illustrate this: established market players (6.1). The product is highly standardized and the switching costs of the customers are low. Players are aggressive (6.2)
A Monopoly is a market structure characterised by one firm and many buyers, a lack of substitute products and barriers to entry (Pass et al. 2000). An oligopoly is a market structure characterised by few firms and many buyers, homogenous or differentiated products and also difficult market entry (Pass et al. 2000) an example of an oligopoly would be the fast food industry where there is a few firms such as McDonalds, Burger King and KFC that all compete for a greater market share.
Markets have four different structures which need different "attitudes" from the suppliers in order to enter, compete and effectively gain share in the market. When competing, one can be in a perfect competition, in a monopolistic competition an oligopoly or a monopoly [1]. Each of these structures ensures different situations in regards to competition from a perfect competition where firms compete all being equal in terms of threats and opportunities, in terms of the homogeneity of the products sold, ensuring that every competitor has the same chance to get a share of the market, to the other end of the scale where we have monopolies whereby one company alone dominates the whole market not allowing any other company to enter the market selling the product (or service) at its price.
The four market structures: perfect competition, monopolistic competition, oligopoly, and monopoly entails various characteristics that exemplify the level of competition within the market. These distinct features include having a number of sellers, producing a homogeneous or differentiated goods or services, pricing power, a level of competition, barriers to entering or exit the markets, efficiency, and profits. Due to the high profit and revenue some firms face within the various market structure, barriers to entry are put in place to restrict new competitors from entering. Natural, artificial, and governmental barriers play a vital role in firms ability to stay in a market, be productive, efficient, and competitive. Firms reaction to price changes, the government’s ability to create a price, and the influence of international trade on the market structures, are essential factors that economist evaluate the various market structures. Overall, the competition between market structures may not always result in the same outcome, due to the behavior and interaction between consumer’s and buyers, but in the end, both the buyer’s and seller’s are needs are
A monopoly is “a single firm in control of both industry output and price” (Review of Market Structure, n.d.). It has a high entry and exit barrier and a perceived heterogeneous product. The firm is the sole provider of the product, substitutes for the product are limited, and high barriers are used to dissuade competitors and leads to a single firm being able to ...
The food and staples retailing is an increasingly competitive industry. The market giants (competitors) are Coles (owned by Wesfarmers) which has 741 stores across Australia and plans to add 70 m...
An oligopolistic market has a small number of sellers dominating market share and therefore barriers to entry are high. These sellers are highly competitive and do not act independently of each other. Access to information is limited so sellers can only speculate of their competitor’s actions. Sellers will take advantage of competitor’s price changes in order to increase market share.
The second market structure is a monopolistic competition. The conditions of this market are similar as for perfect competition except the product is not homogenous it is differentiated; thus having control over its price. (Nellis and Parker, 1997). There are many firms and freedom of entry into the industry, firms are price makers and are faced with a downward sloping demand curve as well as profit maximizers. Examples include; restaurant businesses, hotels and pubs, specialist retailing (builders) and consumer services (Sloman, 2013).