2 minute read
from Peternomics
by StPetersYork
APPLE AND ANDROID
A duopoly is when two firms dominate their own market and an oligopoly is when two firms work together rather than competing to increase overall profits, manipulating the market. During 2017, a record 99.9% of smartphones sold were based on either Android or iOS, showing the clear dominance of the two firms. Apples first phone was introduced in 2007 and android not long after. These were some of the first touchscreen mobile phones, which is one of the main reasons why there is such a distance between them and other businesses. The two firms have worked together by increasing their pricing by a large amount, almost every year. The price increase of the apple iPhone has increased over five years from $650 to $1,000 and the Samsung galaxy phone, for example, has increased from $650 to $900 in four years.
Tactically, the two industries have worked together here to increase each of their total revenue. The fact that their price increases is unlikely to have a huge impact on demand shows that it is a necessity good. This, therefore, shows that they’re top of the list in priority when it comes to people’s needs and wants.
However, the ethical issues that is taking place in this situation is one due to there being a lack of competitiveness and opportunity for other technology companies. Having a lack of breadth within a market gives a consumer a lack of choice and also is expensive for them. Moreover, prices of the duopoly will continue to rise as there is no competition driving it down. In addition to this, less competitiveness also produces less drive for businesses to create new items. This would result in a fall in vibrancy in the market which may have negative individual and social outcomes, like providing less access to necessity goods. In this case, apple and android is also an oligopoly market. Furthermore, price fixing Is very common in these types of markets. You could suggest that apple and android is an example of price fixing, both companies have increased their prices a significant amount. Also, the buying power of the firms can fund political special interests to an extent that the general public cannot compete. Those special interests then persuade politicians to pass legislation that benefits the firms more than the people.
Although, duopolies, as well as oligopolies can have some positive outcomes. For example, with so few significant competitors, firms are able to generate significantly higher profits and it also is for the consumer, the duopoly market is simpler for them to decide on what to buy. Increasing overall profits would eventually increase wages which provides more disposable income for individuals. This therefore increases aggregate demand and benefits the economy as a whole.
