Duopoly Market Structure

   

Added on  2019-09-30

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A duopoly is an oligopoly market structure that contains two firms and it is the most basic form of oligopoly. The term duopoly is also used to describe any market where two firms dominate with a significant market share.As an oligopoly, a duopoly incorporates oligopolistic characteristics and undertakes oligopolistic behaviour. It has all the characteristics of oligopoly except for the number of sellers. Such as significant barriers to entry, interdependent actions and non-price competition. Barriers to entry are a vital characteristic that differentiates an oligopoly from other market structures. Barriers to entry make it difficult for firms to enter the industry and this causes existing firms to maintain greater market control. Interdependent actions imply that firms must take into consideration the reactions of their competitors to any change in price and output. Non-price competition is a method of competition adopted by oligopoly firms and is used because firms find it difficult to compete through prices. It involves advertising and marketing strategies to develop brand loyalty among customers.The Australian retail market consists of almost 140,000 retail businesses with a few major players in the in the supermarket sector. The key players are Woolworths Ltd, Coles Pty Ltd and others, such as ALDI and IGA. The retail market is one of Australia’s largest employers and is a vital contributor to the Australian economy. In this essay I will be addressing the two largest supermarket chains that dominate the supermarket industry, Woolworths and Coles (owned by Wesfarmers Group and Woolworths Limited respectively).The Australian economy experienced fast improvement and development whichin the end prompted the development and expansion of the Australian food retail sector after the 1950’s. The Australian food retail sector has continued to develop and has emerged has one of the fundamental mainstays of the Australian economy. The rapid development of the Australian economy led to the emergence of Woolworth’s and Cole’s first by the 1960s.The supermarket retail sector in Australia has the distinction of being one of the most concentrated in the world (Wardle and Baranovic, 2009: 477). It was indicated by the Australian Competitions and Consumer Council (ACCC) that the Australian grocery industry is commanded by two key players, Coles and Woolworths.
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