Duopoly
Candlefocus EditorVisa and MasterCard are examples of a duopoly that dominates the payments industry worldwide. Both companies offer a number of payment methods, such as debit and credit cards, to consumers and businesses. Visa and MasterCard either own or partner with thousands of banks and financial institutions around the world, providing a swift and secure payment system that's used by businesses and consumers alike.
Despite the advantages of having two companies controlling the market, there are some drawbacks to duopoly. For one, customers typically have few if any choice in products and services offered by the two companies. Additionally, there is a concern that the two players in the duopoly may collude and increase prices for customers to maximize their profits. This can lead to higher prices for consumers and decrease overall competition in the marketplace.
Finally, research suggests that duopoly companies have lower incentives to innovate and invest in research and development. Since these two companies have less competition, they have fewer incentives to create new products or services. This can lead to fewer choices and higher prices for consumers.
Despite the drawbacks, duopolies are usually beneficial to both companies and consumers in some way. By creating a space where only two companies compete, duopolies ensure that prices remain competitively low while also giving companies less incentive to increase prices to increase profits. Although consumers may be limited in terms of choice and innovation, the market structure of a duopoly allows these two players to keep prices lower than would be possible in a more highly-competitive market.