Disadvantages of duopoly
Corruption allegation takes place between the involved companies operating in a similar target market. The disadvantage of duopoly is the limitation of product choices to the target consumers because they can only choose two products that are only provided by the company.
Local government units are responding against companies promoting bureaucracy because they provoke inequality for other companies to establish their businesses.
Though this practice is illegal, it works in favor of these businesses. Companies agree to share the market in half.
High profits generated by the companies can be used for innovation and development of new products and processes. As a result of the competition between duopoly businessmen, consumers are the ones who are favored because monopoly prices have been eliminated.
An example is the presence of two dominating conglomerates that are known for their mall chains across the society. Although an oligopoly offers theoretical benefits if the companies involved are all good actors, the reality is quite the opposite.
Because consumers are given limited choices with an oligopoly, there can be more saving activities in the economy than spending. When they see a different brand name, then it seems like they are choosing a competitive product.
Duopoly pros and cons
Share This. If a certain target market valuably respects the presence of a certain dominating corporation, this means that the management and marketing advantage is consistent with the operational framework of the institution. The advantages help to promote innovation and choice, while the disadvantages can force a lack of spending in the local economy. The only problem with this structure is that the companies often pocket the tax breaks and subsidies instead of passing them along to the consumer. Since companies in an oligopolistic market have full control over it, they are capable of deciding prices as per their choice. This issue can be difficult or impossible to prove, but it can result in an increase in regulation over an industry if negative market behaviors are suspected. Collusion is possible in this structure to further reduce competition. There are several ways that this disadvantage can keep innovation from coming to the market. That leaves a customer in a position where they must accept the abuse to get the bare minimum of what they require or to go without. Operating on an economy of scale like Walmart allows for lower prices and greater accessibility to customers. When they see a different brand name, then it seems like they are choosing a competitive product. Oligopoly helps in lowering the average cost of production of goods, as firms producing similar goods can manufacture products in collaboration with each other. Because there are fewer choices available in the market, these companies must take their outreach campaigns to new levels to draw attention to their products or services. This investment can help to refine the current inventory as well to increase the overall value proposition that consumers experience in each situation.
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