Duopoly is a type of imperfect market in which there are only two sellers producing an identical product in the market. Augustin Cournot, a French economist, was the first economist to develop the model of duopoly. In a duopoly situation, each seller may sell an identical product or a differentiated product. Duopoly may be broadly classified into:What can economic models tell us about the form and structure of our politics? If anything?
1. Duopoly with product differentiation: Here the producers may be producing the same product, but there may be minor differences in packaging, size, colour, shape etc. When there is product differentiation each seller may have his own customers for the product and is not afraid of this rival.
2. Duopoly without product differentiation: When similar products are produced by the competing duopolists it is known as duopoly without product differentiation. In such a situation each seller cannot ignore the price and output of the rival in the market . . .
From the English Literature blog: