Disadvantages and disadvantages of duopoly

They can do so by creating a complex series of barriers that prevent others from offering new products or services. Their realization is only possible when one of the major player adopts it for use. Monopoly avoids duplication and hence avoids wastage of resources. Lack of competition may lead to low quality and out dated goods and services.

Suppose, if a firm decides to reduce its product's price to increase its market share, it is quite possible that other major players will also reduce their price, thereby hampering the strategy of the previous firm.

Features of duopoly

In oligopoly, many times, products of two different competitive companies are derived out of one large firm. The advantages and disadvantages of this market form can be clearly demarcated. Due to the fact that monopolies make lots of profits, it can be used for research and development and to maintain their status as a monopoly. A duopoly is a business term to describe an industry which has just two producers in one market. Even the beer industry fits into this category. We have to understand that duplicate and fake products are a real problem in many countries. As a consumer, you want to have different choices of commodities or services to satisfy your basic needs. List of the Disadvantages of an Oligopoly 1. Consumers will have to consistently continue their patronization of the products, which is helpful for the dominating companies to continue serving their regular target markets. Because consumers are given limited choices with an oligopoly, there can be more saving activities in the economy than spending.

One very clear example of a duopoly is the soft drinks market, which is dominated by Coca-Cola and its rival, Pepsi Co. Although an oligopoly can adopt a strategy which leads to inefficiencies and a lack of innovation, it can also work toward competitive outcomes if it so chooses.

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Examples Among the best-known examples of duopoly we can mention are Visa and MasterCard credit cards. Inthe company receive the highest tax-break in the history of the United States under the threat of moving the company to a different location.

Duopoly advantages and disadvantages pdf

When there are firms participating in an oligopoly, then their goal is to keep disruptors out of their industry at any cost. It allows them to fix prices artificially high in a manner similar to a monopoly, but with the presence of other companies in the marketplace. Consumers may be charged high prices for low quality of goods and services. It should be noted that there can be more than two producers in a duopoly, but the main two will need to have dominant market share. Though this practice is illegal, it works in favor of these businesses. In this way they are able to reach an agreement to optimize their profits. The Principal Advantages and Disadvantages of Oligopoly When the market is dominated by a few suppliers, it is termed as oligopoly. When they see a different brand name, then it seems like they are choosing a competitive product. There are times when only two different providers for some products exist. Oligopoly helps in lowering the average cost of production of goods, as firms producing similar goods can manufacture products in collaboration with each other.

Advantages of Oligopoly Large firms having strong hold over the market are able to make huge profits as there are few players in the market.

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15 Oligopoly Advantages and Disadvantages