Duoploy - What does duopoly mean? According to the publication Investing Answers, the actual meaning of 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 of a service. There are two different types of duopoly. 1) The “Cournot duopoly” defines competition between the two companies based on quantity and supply. The duopoly involves two companies agreeing to deviate from the market. »2) The “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 pricing as both competitors attempt to attract more customers and produce more profit by reducing prices." The threat of falling prices means that “Bertrand equilibrium prices and profits are generally lower (and quantities higher) than in “courtnot duopolies.” (Investing Answers 2014, duopoly, accessed March 19, 2014, <.. >) - What would be the goal of the duopoly? A duopoly is a market power that requires each manufacturer to strategically consider the potential reaction of its competitors to particular business decisions when If the manufacturer in the duopoly finalizes its prices, these tend to drive down the prices of the duopoly's products. company down to the cost of production. This situation gives duopoly firms an effective incentive to agree to change a “monopoly” price and share the resulting profits. It is claimed that the duopoly is most effective when the consumer's demand for the product is not greatly affected by the price. Additionally, duplies are more efficient in the short run, because in the long run, prices often become more elastic as consumers find another alternative for the product. Ho...... middle of paper ... lowering prices to attract consumers will increase consumer demand because consumers pay less for their groceries. However, Woolworth and Coles use their market power to maintain a constant competitive environment among other supermarkets such as Aldi and Costco. Advantages of duopoly - The advantages of duopoly in supermarkets are that it provides close competition for other supermarkets. - Price competition is directly aimed at other producers such as Woolworth and Coles, offering better prices to its consumers. Disadvantage of duopoly: Two huge companies in one market will make it very difficult for smaller companies to gain recognition or market share. This means that many new businesses exit before they are able to generate new ones. Its competitive environment will make it more difficult for other companies to develop more products and keep pace with their competitors..