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Duopoly and Oligopoly market forms are forms of imperfect competition. When
there are two firms producing and selling a product in a market it is called
duopoly. Duo means two and poly is seller. For example two aerated soft drink
producers and sellers in India – Pepsi and Coca Cola. On the other hand when
there are few firms or sellers producing or selling a product oligopoly exists.
When there are two or more than two, but not more than ten sellers of a
product, oligopoly exists. Oligopoly is competition among the few. The simplest
form of oligopoly is duopoly.
1
Types of Duopoly and Oligopoly
The duopoly and oligopoly can be broadly divided in two types
1. Collusive and
2. Non collusive
Collusive oligopoly exists when the firms in this market join hands or come
together for deciding the price and output to be sold. Collusive oligopoly means
a secret market structure where firms producing similar goods may behave like
a monopolist.
Non collusive oligopoly, on the other hand compete with each other for deciding
price and output in the same market. The question arises due to
indeterminateness of the demand curve of individual firm in this type of
market.
Following chart gives clear picture of various models of collusive and non
collusive oligopoly
Models of Oligopoly/Duopoly
2
These models are explained in details in subsequent modules.