Duopoly is a market structure in which there are only two firms operating in the market. It is a type of oligopoly, which refers to a market structure characterized by a small number of large firms dominating the industry. In a duopoly, the two firms have a significant influence on the market and their actions can directly impact the market conditions and pricing strategies.

Here is a detailed explanation of why a market with two firms is known as a duopoly:

Definition of Duopoly
A duopoly is a market structure where there are only two firms that dominate the market for a particular product or service. These firms are interdependent and their actions often have a direct impact on each other's market share and profits.

Key Features of Duopoly
1. Limited Competition: With only two firms in the market, competition is limited compared to other market structures. The actions of one firm directly affect the other firm's market position, leading to strategic decision-making.

2. Interdependence: The firms in a duopoly are interdependent, meaning their actions and decisions are influenced by each other. For example, if one firm lowers its prices, the other firm might be forced to lower its prices as well to remain competitive.

3. Market Power: Due to the limited number of firms, duopolies often have considerable market power. This allows the firms to exert control over prices, output levels, and market conditions.

Examples of Duopolies
There are several real-world examples of duopolies across various industries. Some notable examples include:

1. Coca-Cola and PepsiCo: These two companies dominate the global soft drink market, making it a duopoly. Their actions in terms of pricing, marketing, and product development directly impact each other's market share.

2. Boeing and Airbus: These two companies are the leading manufacturers of commercial aircraft. They compete fiercely in the global market, and their decisions on pricing and product innovation greatly influence the industry.

3. Visa and Mastercard: These two companies dominate the global credit card industry. Their networks and payment systems are widely used, and their actions in terms of fees and services have a significant impact on the market.

Conclusion
In conclusion, a market with two firms is known as a duopoly because it exhibits the key characteristics of limited competition, interdependence, and market power. Duopolies are a type of oligopoly and are prevalent in various industries. The actions of the two firms in a duopoly directly impact each other and can have a significant influence on the market conditions and pricing strategies.