4 Duopolies and Why You May Be Interested in Them

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4 Duopolies and Why You May Be Interested in Them

What is a Duopoly? A duopoly is a specific type of oligopoly where only two producers exist in one market.  While in reality this is applied to markets where two producers control the vast majority of the production and tend to have dominant control.

Duopolies can be interesting to study for investors because often the companies have a competitive advantage or moat, which is something Warren Buffett always looks for.

None the less here are some duopolies and why they could be worthy of doing more homework.

 

  1. Visa (NYSE: V) and Mastercard (NYSE: MA)

    Visa LogoMastercard MA
    While they have competition from companies like Paypal, Square, and even other card companies like American Express (NYSE: AMEX) and Discover, they control the vast majority of electronic payments and customers demand that businesses can take Mastercard and VISA. There is this assumption that it will be available and even if retailers like Walmart don’t like them they are trusted by the customer and demanded as a form of payment.


  2. FedEx (NYSE: FDX) & UPS (NYSE: UPS)

    Fedex FDXUPS logo

    While they have competition in the public space from the United Postal Service, Fedex and UPS control the shipping market in the United States and have advantages of scale. Even the United Postal Service has struggled because of the efficiency of UPS and Fedex.


  3. Pepsi (NYSE:PEP) and Coke (NYSE: KO)

    Coca Cola Logo KOPepsi PEP
    While there may be some scary signs in the market for sugary drinks with increasing amounts of countries and various governments deciding on sugary taxes, Pepsi and Coke control unprecedented scale and distribution for beverages and their reach goes beyond their trademark beverages with solutions for almost every scenario and the ability to purchase young upstarts and potential threats.


  4. Fannie Mae & Freddie Mac (FNMA, FMCC)

    Freddie Mac Fannie Mae FMCC FNMA
    Fannie and Freddie guarantee almost all the conventional mortgages that are being written especially with government policy and capital standards so strict for banks on whom they can lend to. The traditional business of guaranteeing high down payment conventional loans to creditworthy borrowers that the GSEs have always participated in continue to be very profitable and without their existence the 30 year mortgage would become extinct as it is non-existent in other countries. Fannie and Freddie however have an interesting legal positioning which makes an investment more complex.

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