A combination of two market structure.

1. MONOPOLY AND DUOPOLY
Presented by-
Shubhi Verma

2. MONOPOLY

3. Meaning
• A market structure in which only one
producer or seller exists for a product that has
no close substitutes.
• No close substitutes – unique product
• Price maker – control over price

4. Characteristics of monopoly
• Single Seller
• No Close Substitutes
• Price Maker
• Blocked Entry
• Non-price Competition
• Availability of information(Imperfect)

5. Monopoly…
• Monopolies exist because of barriers to entry
into a market that prevent competition.
ex:-railways, electricity.
• There are three general classes of barriers to
entry(CAUSE):
– Natural barriers, the most common being
economies of scale
– Actions by firms to keep other firms out
– Government (legal) barriers

6. Economies of sale
• In some industries, the larger the scale of
production, the lower the costs of production.
• Entrants are not usually able to enter the market
assured of or capable of a very large volume of
production and sales.
• This gives incumbent firms a significant
advantage.
• Examples are electric power companies and
other similar utility providers.

7. Government
• Governments often provide barriers, creating
monopolies.
• As incentives to innovation, governments
often grant patents, providing firms with
legal monopolies on their products or the use
of their inventions or discoveries for a period
of 17 years.

8. Types of monopolies
• Natural monopoly: A monopoly that arises from
economies of scale. The economies of scale arise from
natural supply and demand conditions, and not from
government actions.
• Local monopoly: a monopoly that exists in a limited
geographic area.
• Bilateral Monopoly: only one buyer, very rare
ex; expensive defence goods-govt.is single buyer.
• Regulated monopoly: a monopoly firm whose behavior is
overseen by a government entity.
• Monopolization: an attempt by a firm to dominate a
market or become a monopoly.

9. DUOPOLY

10. Introduction
• Two Words
Duo---Two
Polies---Sellers
• Market with TWO sellers
• Just below Monopoly
• Simplest Form of Oligopoly
• Have Power to control Market
• Super Normal Profits
• Two Classifications:
One in which there is coordination b/w duopolists.
One in which there is no coordination.

11. Meaning
• A situation in which two companies control all or
nearly all of the market for a given product or service.
• A Duopoly is the most basic form of oligopoly, which
is a market dominated by a small number of
companies.
• A Duopoly can have the same impact on the market
as a Monopoly if the two players collude on prices or
output. Collusion results in consumers paying higher
prices than they would in a truly competitive market
and is illegal under U.S. antitrust law.

12. Meaning (cont…)
• A duopoly, quite simply, is a situation where
there are just two sellers in a market. A
duopoly can also refer to a situation where a
market is dominated by two sellers. There
may be more than two sellers in the market
but the supply of the product is controlled by
just two of them.

13. Examples
• Boeing and Airbus have been called a
duopoly for their command of the large
passenger airplane market.
• Similarly, Amazon and Apple have been
called a duopoly for their dominance in the e-
book marketplace.

14. Features
• Two firms
• Strong price control
• Barriers to entry

15. Advantages Disadvantages
• Close competition
• Interaction
• Establishment of New
firms is difficult due to
Duopolies.
• Lack of new firms
means lack of new
products which leads to
Stale in the market.

16. THANK YOU! 