Duopoly
From Wikipedia, the free encyclopedia
A true duopoly is a specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market. In the field of industrial organization, it is the most commonly studied form of oligopoly due to its simplicity.
Contents |
[edit] Duopoly Models in Economics
There are two principal duopoly models, Cournot duopoly and Bertrand duopoly:
- The Cournot model, shows that two firms assume each other's output and treat this as a fixed amount, and produce in their own firm according to this.
- The Bertrand model, in which, in a game of two firms, each one of them will assume that the other will not change prices in response to its price cuts. When both firms use this logic, they will reach a Nash Equilibrium.
[edit] Politics
Modern American politics has been described as a duopoly since the Republican and Democratic parties have dominated and framed policy debate as well as the public discourse on matters of national concern for about a century and a half. Third Parties have encountered various obstacles to getting onto ballots at different levels of government, more so in recent decades.
See List of political parties in the United States for a more comprehensive look at the politics of the Two-party system, Duverger's law.
[edit] Examples in business
The most commonly cited duopoly is that between Visa and Mastercard, who between them control a large proportion of the electronic payment processing market. In 2000 they were the defendants in a US Department of Justice antitrust lawsuit[1][2]. An appeal was upheld in 2004[3].
Examples where two companies control a large proportion of a market are:
- Moody's vs S&P in Ratings market
- Pepsi vs Coca-Cola in soft drink market
- Gillette vs Wilkinson Sword/Schick in razor blade market
- Airbus vs Boeing in commercial jet aircraft market
- Sotheby's vs Christie's in diamond auctions
- Marvel Comics vs DC Comics in comic books
- Sirius vs XM in the satellite radio market
- Intel vs AMD in the Microprocessor market
- The local cable company vs the local telephone company in residential broadband Internet access
- The Home Depot vs Lowes in the American retail home improvement market.
- Vodafone vs Mobinil in the Egyptian mobile market
- Telecom vs Vodafone in the New Zealand mobile market
- Kodak vs Fujifilm in motion picture film stock market
- K-Kauppa vs S-Group in the Finnish supermarket market (jointly they control 75% of supermarket market)
- Foodstuffs vs Progressive Enterprises in the New Zealand supermarket market (jointly they control 90% of supermarket market)
- Nvidia vs ATI in the mainstream Graphics card market.
- LexisNexis vs Westlaw in legal research; the two companies together have been jokingly referred to as Wexis
- PetroChina vs Sinopec in Chinese oil production.
- Rai vs Mediaset in the Italian television market.
- Telstra vs Optus in the Australian Telecoms market.
- Dish Network vs DirecTV in satellite provider market.
- Televisa vs TV Azteca in the Mexican Multimedia market. (jointly they control 95% of the multimedia market)
- Handango vs Motricity in mobile content retailing market.
- Migros vs Coop in Swiss retail food market.
[edit] Broadcasting
Duopoly is also used in the broadcast television and radio industry, referring to a single company owning two outlets in the same city. This usage is technically incompatible with the definition of the word, inasmuch as there are generally more than two owners of broadcast television stations markets with duopolies. In the United States, this has been frowned upon when using public airwaves, as it gives too much influence to one company. In Canada, this definition is more commonly called a "twinstick".
Duopolies were not allowed in the United States until 2001. The Federal Communications Commission allows common ownership of two stations in a single market with two conditions:
- There must be at least eight unique station owners left in the market once a duopoly is formed. In effect, duopolies are not allowed in any market with fewer than nine full-power stations (counting noncommercial stations).
- Two of the four highest-rated stations in a market cannot be owned by the same person.
There are at least two cases where a company has been accused of having duopolies where they aren't legally permitted by using shell corporations to control a second station in a market.
- Sinclair Broadcast Group controls the operations of all six stations owned by Cunningham Broadcasting through local marketing agreements. However, nearly all of Cunningham's stock is held by trusts in the name of Sinclair's founders and owners, the Smith family. In three markets, Cunningham owns the fourth-highest rated station while Sinclair owns one of the three highest-rated stations. In the three other markets, there are too few stations or unique owners to legally permit a duopoly.
- Malara Broadcasting owns two stations--WPTA-TV in Fort Wayne, Indiana and KDLH-TV in Duluth, Minnesota. Both stations' operations are controlled by Granite Broadcasting, which owns WISE-TV in Fort Wayne and KBJR-TV in Duluth. Malara files its Securities and Exchange Commission reports jointly with Granite, leading to allegations that Malara is simply a shell for Granite. Neither Fort Wayne nor Duluth have enough stations to legally permit a duopoly.
See also concentration of media ownership.
[edit] Examples in American television
- Cleveland: WOIO-CBS 19 & WUAB-MNTV 43 (Raycom Media)
- Dayton, Ohio: WKEF-ABC 22 (Sinclair Broadcast Group) & WRGT-TV-Fox 45 Cunningham Broadcasting effectively a Sinclair duopoly in violation of FCC rules
- Buffalo, New York: WIVB-TV-CBS 4 & WNLO-The CW (LIN TV); WUTV-FOX 29 & WNYO-MNTV] (Sinclair Broadcast Group)
- Jacksonville, Florida: WJXX-ABC 25 & WTLV-NBC 12 (Gannett); WTEV-TV-CBS 47 & WAWS-FOX 30 (Clear Channel Communications)
- Hartford, Connecticut: WTNH-TV- ABC 8 & WCTX-MNTV 59 (LIN TV); and WTIC-TV-Fox 61 & WTXX-The CW
- Raleigh-Durham, North Carolina: WRAL-TV-CBS 5 & WRAZ-FOX 50 (Capitol Broadcasting); WLFL-The CW 22 & WRDC-MNTV 28 (Sinclair Broadcast Group)
- Washington, DC: WTTG-FOX 5 & WDCA-MNTV 20 (Fox Television Stations Group)
- New Orleans: WNOL-The CW 38 & WGNO ABC 26 (Tribune Broadcasting); WWL-TV-CBS 4 * WUPL-MNTV 54 (Belo)
- Norfolk: WAVY-TV-NBC 10 & WVBT FOX 43 (LIN TV)
- New York City, New York: WWOR-TV - MNTV 9 & WNYW - Fox 5 (Fox Television Stations Group)
- Boston, Massachusetts: WBZ-TV-CBS 4 & WSBK-TV- IND (CBS Corporation)
- Boston, Massachusetts: WHDH-TV-NBC 7 & WLVI-TV- The CW 56 (Sunbeam Television)
- Kansas City, Missouri: KMCI-TV IND 38 & KSHB-TV-NBC 41 (Scripps-Howard Broadcasting); KCTV-CBS 5 & KSMO-TV-MNTV 62 (Meredith Corporation)
- Minneapolis-St. Paul: KSTP-TV-ABC 5 & KSTC-TV-IND 45 (Hubbard Broadcasting); KMSP-TV 9 FOX & WFTC 29 MNTV (Fox Television Stations Group)
- Denver: KUSA-TV - NBC 9 & KTVD MNTV 20 (Gannett)
- Los Angeles: KCBS-TV CBS & KCAL IND 9 (CBS Corporation), KNBC- NBC 4 , KWHY Spanish Ind. & KVEA - TEL 52 (NBC Universal); and KTTV FOX and KCOP (Fox Television Stations Group)
- Chicago: WFLD - FOX 32 and WPWR MNTV 50 (Fox Television Stations Group)
- Little Rock, Arkansas: KLRT-TV - Fox 16 and KASN - The CW 38 (Clear Channel Communications (sale pending)
- Duluth, Minnesota: KBJR-TV - NBC 6 (Granite Broadcasting) & KDLH-TV - CBS 3 (Malara Broadcasting)
- Sacramento, California: KOVR-CBS 13 and KMAX-TV-The CW 13 (CBS Corporation); KCRA NBC 3 & KQCA-MNTV 58 (Hearst-Argyle Television)
- Phoenix, Arizona: KTVK-IND 3 & KASW-The CW 61 (Belo) ; KSAZ-FOX 10 & KUTP-MNTV 45 (Fox Television Stations Group)
A special case is Salt Lake City. The NBC affiliate KSL-TV is owned by Bonneville International, and an educational station, KBYU-TV, is owned by Brigham Young University and carries PBS programming. Bonneville is owned by the Deseret Management Corporation, a for-profit arm of The Church of Jesus Christ of Latter-day Saints; BYU is directly owned by the LDS Church. While Deseret and BYU are separate entities, the fact that both are owned by the LDS Church makes them a duopoly in a sense. There are also examples of educational interests owning two stations in the same market, such as WQED/WQEX in Pittsburgh and Milwaukee Public Television's two stations.
Where there are 2 different owners listed, 1 station owner controls another station, called a local marketing agreement. Owner "A" doesn't own station "B", they just operate it for owner "B".
The NBC Universal duopoly in Los Angeles is a special case. Apparently, KWHY & KVEA both count as ½ of a station, going back to an old rule trying to make UHF stations start up, with VHF station counting as 2 UHF stations. Apparently, it allows a "trioply" in Los Angeles.