In the world of economics, a duopoly refers to a situation where there are only two companies controlling the market. When these two companies come to an agreement to function as a monopolist, it is known as collusion. This type of behavior is often deemed illegal under antitrust laws, as it can lead to an unfair advantage in the marketplace.

Collusion in a duopoly occurs when the two companies agree to work together to increase prices or limit output. This means that they can effectively control the market like a monopolist, without actually having a monopoly.

One of the most well-known examples of collusion in a duopoly is the case of OPEC, the Organization of the Petroleum Exporting Countries. OPEC controls the vast majority of the world`s oil supply and is made up of 13 countries, but the majority of the power is held by two of its members – Saudi Arabia and Russia.

These two countries often work together to control oil prices by limiting production. When oil prices rise, OPEC benefits as a whole, but Saudi Arabia and Russia tend to benefit the most. However, when oil prices fall, it is often the smaller countries in OPEC that suffer the most.

Collusion in a duopoly can also occur in other industries, such as telecommunications or airlines. For example, two major airlines could agree to only operate on specific routes, effectively limiting competition in those markets. This can lead to higher prices for consumers and a lack of innovation in the industry.

Antitrust laws are in place to prevent this type of behavior. Companies found guilty of collusion can face hefty fines and even criminal charges. However, it can be difficult to prove that collusion is taking place, as companies may try to hide their actions.

In conclusion, collusion in a duopoly is a serious issue that can have a significant impact on the economy and consumers. It is important for governments to enforce antitrust laws and prevent companies from working together to control the market. By promoting fair competition, consumers can benefit from lower prices and increased innovation in the marketplace.