A duopoly occurs when, in a market, the development of an activity wave offer of a good is distributed between only two companies. In other words, in a duopoly there are only two sellers.
Duopoly is a specific type of oligopoly. This is the name given to the concentration of supply in a limited number of companies.
When the entire offer is reduced to a single seller, we speak of monopoly. If there is more than one seller, although the number is small, it is an oligopoly. If there are specifically two companies monopolizing the market, the concept of duopoly can be used.
All these cases (duopoly, oligopoly and monopoly) reveal the existence of a imperfect competition. This is due to the fact that some market actor is in a position to carry out a manipulation of price for maximize your earnings. In a market with perfect competition, on the other hand, the price is left to the game of supply and demand.
With many companies competing with each other, none can set the price according to their interests, because consumers have several options to choose from. This does not happen in a duopoly, where two players control the market.
It is usual that, in a duopoly, both producers agree on the price, without lowering or raising it. In this way the duopoly ends up developing from the same mode than a monopoly.
It is often said that the online advertising market it works like a duopoly. Google and Facebook they are the companies that dominate the sector. The large aircraft market, meanwhile, it is a duopoly controlled by Boeing and Airbus.