What are the types of differentiation?
There are several different factors that can differentiate a product, however, there are three main categories of product differentiation. Those include horizontal differentiation, vertical differentiation, and mixed differentiation.
Is Coca Cola a duopoly?
Then the most efficient number of firms is two (duopoly). Firms may compete on price or they could seek to collude – either tactically or formal agreement. This will depend on the nature of the industry. For example, Coca-cola and Pepsi compete on brand image and spend a high share of revenue on advertising.
What are the features of duopoly?
Duopoly characteristics
- Market consists of two producers.
- Producers have a high strategic dependence.
- Chances of collusive behavior are high.
- The level of competition may be fierce.
- Monopoly power is significant.
- Entry barriers are high.
- Economies of scale are high.
Are Coke and Pepsi a duopoly?
essentially a duopoly with two firms, Coca-Cola Co. For example, between 1997 and 2004, Coke and Pepsi introduced 22 new brands. Concerning price competition, one study concludes that a merger of the two firms would raise prices by between 16 and 17 percent, suggesting the advantage of duopoly.
What is an example of a duopoly?
A duopoly is a form of oligopoly, where only two companies dominate the market. The companies in a duopoly tend to compete against one another, reducing the chance of monopolistic market power. Visa and Mastercard are examples of a duopoly that dominates the payments industry in Europe and the United States.
What is an example of collusion?
Collusion occurs when rival firms agree to work together – e.g. setting higher prices in order to make greater profits. For example, vertical price-fixing e.g. retail price maintenance. (For example, Fixed Book Price (FBP) set the price a book is sold to the public.
What is Duopsony?
A duopsony is an economic condition in which there are only two large buyers for a specific product or service. Combined, these two buyers determine market demand, giving them considerably strong bargaining power, assuming they are outnumbered by firms vying to sell to them.