The recent Indigo fiasco in the aviation sector highlighted the issues and concerns faced due to duopoly in delivery of commodities and services.

What is Duopoly?

• It refers to a scenario in which two suppliers dominate the market for a commodity or service.
• In India, markets with just two suppliers in operation are becoming more common. E.g., Duopoly of Ola and Uber in cab services.
• Reason for Rise of Duopoly

• High capital requirements: Makes entry and survival difficult for smaller firms. E.g., Aviation sector.
• Network effects: Big firms spend early on to acquire customers, squeezing out competitors. E.g., Telecom sector
• Regulatory Gaps: Allows dominance to deepen.

Challenges posed by Duopoly

• Inflated Pricing and Reduced Affordability: Lack of competitive pressure lets dominant firms raise prices with little resistance, increasing consumer costs. E.g., Food delivery.
• Limited Consumer Choice and Market Options: Shrinks the presence of smaller players leaving consumers with very few alternatives.
• Stagnation in Innovation: Innovation is driven by staying slightly ahead of the lone rival, not by fear of disruptive new entrants. E.g., Telecom sector.  
• Excessive Lobbying Power and Regulatory Influence: Powerful duopolistic firms can use their significant influence to protect their interests and block new technologies. E.g., e-commerce sector.
• Systemic Vulnerability and Capacity Failures: Failure of one player in a duopoly can lead to economy-wide losses and unsatiated demand. E.g., Recent Indigo crisis in aviation sector.

Conclusion

Addressing India’s emerging duopolies requires moving beyond post-facto regulation to proactive market design. This includes strengthening CCI’s ex-ante powers, improving coordination between CCI and sectoral regulators, lowering entry barriers through regulatory sandboxes and shared infrastructure, and ensuring transparent pricing and data portability to empower consumers.