DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH

Name : A.Satyavani Kumari

Designation : Lecturer
Branch : DCCP
Institution : Govt. Poly. for Women, Suryapet
Year/Semester : V Semester
Subject : Business Economics-I
Subject Code : CCP-502
Topic : Markets
Duration : 50 mts.
Sub Topic : Features of Duopoly market &
Oligopoly market.
Teaching Aids : PPT CCP.502.59 1
Recap

In the last classes we have discussed about

 Classification of Markets
 Features of perfect Competition
 Features of Monopoly Market
 Types of Monopoly

CCP.502.59 2
Objectives

On completion of this period you would be

able to know:
 What is duopoly Market?
 Features of duopoly Market
 Types of duopoly
 Features of oligopoly

CCP.502.59 3
 Structure

 Meaning of Duopoly
 Features of Duopoly
 Types of Duopoly

CCP.502.59 4
 Duopoly
A market situation with only two sellers

CCP.502.59 5
Features of Duopoly
 Two sellers in the market
 Product is identical
 Two sellers share the monopoly power

CCP.502.59 6
Types of Duopoly

a) Duopoly without product differentiation

c) Duopoly with product differentiation

CCP.502.59 7
Duopoly without product differentiation:

 Two sellers sell the identical product

 Collusion between sellers may exist
 Agreement between sellers regarding quotas
assignment, division of territories etc

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 Cost curves of two sellers may be identical if
demand is stable or less elastic
 Ultimately collusion or agreement between two
sellers leads a situation similar to monopoly

CCP.502.59 9
 Absence of collusion or agreement between
sellers in duopoly without product differentiation
leads to constant price war.
The points to be considered in price war are:
a) Costs and gains
b) Size of firms
c) Elasticity of demand
d) Mobility of purchasers etc

CCP.502.59 10
In the absence of product differentiation
 Products are identical
 Two sellers charge the same price

Otherwise the seller charging higher

price have to lose his business

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Duopoly with product differentiation

 Each seller has his own goodwill

 No fear of immediate rivalries
 As products are not identical, the seller with
better product can survive longer and earn
supernormal profits.

CCP.502.59 12
 Oligopoly

A market situation with a few sellers suitable to:

 Automobile industry
 Electrical appliance manufacturing industry

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Features of oligopoly market

 A few sellers in the market

 Product may be homogeneous or differentiated

 Interdependence among firms

CCP.502.59 14
 Cautious about the actions of rivals

 Advertising plays important role

 Constant struggle against rivals

CCP.502.59 15
 Lack of uniformity in the size

 Lack of certainity

 Price rigidity

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 Summary

 Duopoly-Two sellers
 Oligopoly-Few sellers

CCP.502.59 17
Review Questions

1. Duopoly may be of how many types? What are

they?
A: Duopoly may be of two types. They are:
(a) Duopoly without product differentiation
(b) Duopoly with product differentiation

CCP.502.59 18
1. In duopoly without product differentiation
collusion of firms may lead to ________

Ans : Monopoly market situation

3. Under oligopoly market there will be ________

number of sellers.

Ans : A few

CCP.502.59 19
1. Unless there is a collusion of firms under
duopoly without product differentiation constant
price war will exist
YES/NO
Ans : YES

5. Advertisement has no such important role under

oligopoly
YES/NO
Ans : NO

CCP.502.59 20
1. Oligopoly seller need not be conscious about
rivals
YES/NO

Ans : NO

5. Oligopoly situation is best suitable to share

market
YES/NO

Ans : NO

CCP.502.59 21
Examination Questions
1. Write a short note about different types of duopoly.

2. Explain the features of oligopoly.

CCP.502.59 22
Assignment

1. What is Duopoly. Explain Duopoly without

product differentiation and with product
differentiation?

CCP.502.59 23