Duopoly Flashcards
1
Q
Market structure
A
market structure dominated by two firms.
A pure duopoly is a market where there are just two firms. But, in reality, most duopolies are markets where the two biggest firms control over 70% of the market share.
2
Q
Characteristics
A
Strong barriers to entry in the market, e.g. brand loyalty
Significant economies of scale
Duopolies are profitable industries and have a similar outcome to monopoly – with price above marginal cost and a degree of allocative inefficiency. The drawbacks of higher prices may be offset by economies of scale and lower average costs.
