Meaning and Features of Duopoly and COURNOT’S DUOPOLY MODEL-Assumptions, Diagram with Explanation, it's Defects
DUOPOLY Duopoly is a market situation where there are only two sellers. Both the sellers are completely independent and no agreement exits between them. In spite of being independent, each seller has to carefully consider the indirect effects of its own decision to change its price or output or both, as it will affect the other. Duopoly can be with or without product differentiation. Features of duopoly 1-There are only two companies that share the market. 2- Both sellers within a duopoly are interdependent. Even each seller may affect the other by his market policies. That’s why each seller attempts to make a correct guess of the rival’s motives and actions. 3- Seller makes different policies basically price reduction for increasing the demand for the product. If a seller reduces the price of the product, the other will also do the same and it won’t impact on demand, but if the seller will increase the price, other will not follow it and it will cause to decrease in demand...