Economics Supply And Demand Questions Medium
A monopoly and a duopoly are both market structures characterized by a limited number of firms operating in a particular industry. However, there are significant differences between the two.
A monopoly refers to a market structure where there is only one firm that dominates the entire industry and has complete control over the supply of a particular good or service. In a monopoly, there are no close substitutes available, and the monopolistic firm has the power to set prices and output levels without facing significant competition. This lack of competition often leads to higher prices and reduced consumer choice.
On the other hand, a duopoly refers to a market structure where there are only two firms that dominate the industry. These two firms have a significant market share and often compete with each other for market dominance. In a duopoly, the actions of one firm directly impact the other, leading to strategic decision-making and interdependence between the two firms. This can result in intense competition, price wars, and innovation as each firm tries to gain a competitive advantage over the other.
In summary, the main difference between a monopoly and a duopoly lies in the number of firms operating in the market and the level of competition. A monopoly involves a single firm with no competition, while a duopoly involves two firms competing with each other.