Duopoly

Duopoly is a market structure with only two companies that can sell both homogeneous and differentiated products to many buyers.

When there is a duopoly, both companies on the market can influence the market price. In a duopoly market, the competitor follow any price change that the other company is taking. Duopoly means that the competitor lowers their prices when the other company lowers the price but keep prices unchanged when the other company raises its prices.

Duopoly means higher prices for consumers compared to a perfect market and monopolistic competition, but lower prices compared to monopoly.