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With a duopoly you don't need direct collusion, you can exercise monopoly power just by watching what your "competitor" is doing. You don't have to meet behind
by thayne 4y ago
With a duopoly you don't need direct collusion, you can exercise monopoly power just by watching what your "competitor" is doing. You don't have to meet behind closed doors to fix prices, you just set your prices to be exactly equal to your competitor. Or if the market is segmented in some way, and one competitor enters a specific segment, the other one can focus on other segments. Like say Lyft focusing on cities that don't already have Uber, and vice versa, to reference another comment.
- kergonath 4y ago> you can exercise monopoly power just by watching what your "competitor" is doing That is not a monopoly, which implies that the market is controlled by only one company. Not two. “Monopoly” is not just something you say when you don’t like a company. Also, a monopoly in itself is not necessarily illegal or problematic. The real issue is a company abusing its market power, which does not require anything like a monopoly. > You don't have to meet behind closed doors to fix prices, you just set your prices to be exactly equal to your competitor. Then it is not collusion. It’s just a poorly functioning market, or something that cannot work as a free market (some natural monopolies are like that).