Duopoly- What does duopoly mean? According to the publication that invests the answers, the actual meaning of duopoly as a whole states that "duopoly is a form of "oligopoly" that occurs when two companies (or countries) control all or most of the market for a product or service.'There are two different types of duopoly.1) 'Cournot duopoly', defines the competition between the two companies based on quantity and supply. Duopoly involves two companies agreeing to slide into the market.'2) The 'Bertrand duopoly ' occurs when two companies compete on price. Since consumers will prefer a cheaper alternative among similar products, this leads to a zero profit price as the two competitors attempt to attract more customers and produce more profits through reducing the price. price The threat of a price reduction means that “Bertrand equilibrium prices and profits are generally lower (and quantities higher) than in “backyard duopolies”. (Investment Answers 2014, Duopoly, Viewed March 19, 2014, <.. >)- What is the purpose of duopoly? A duopoly is a market power that forces each manufacturer to strategically consider its competitors' potential reaction to particular business decisions when If the duopoly's manufacturer completes on prices, these tend to drive down the prices of the companies' products to the cost of production . This situation gives duopoly companies an effective motivation to agree to change a “monopoly” price and share the resulting profit. It is argued that duopoly is most effective when consumer demand for the product is not strongly influenced by price. Additionally, duals are more effective in the short term, as in the long term prices often become more elastic as consumers find another alternative for the product. I have...... middle of paper ......lowering prices to attract consumers will increase consumer demand as consumers pay less for groceries. However, Woolworth and Coles are using their market power to maintain a constant competitive environment among other supermarkets such as Aldi and Costco. Advantages of Duopoly: The advantage of duopoly in supermarkets is that it represents close competition for other supermarkets. Price competition. it is directed at other manufacturers such as Woolworth and Coles offering better prices to its consumers. Disadvantage of Duopoly: Two large companies in a market will make it very difficult for smaller companies to gain recognition or market share. This means that many new companies exit before they are able to generate new products. The competitive environment will make it more difficult for other companies to develop more products and keep up with competitors..