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Oligopoly  Monopoly  Introduction & History  Major players in mobile service sector & there market share in India.  Classification of oligopoly.  Feature of oligopoly.  Kinked demand curve.  Conclusion.


Monopoly

Monopolistic Competition

Oligopoly

Perfectly Competitive Market

Monopoly
There is market power Single seller One product (limited or no good substitutes) Barriers to entry

Monopolistic Competition
Many firms Free entry and exit Differentiated but highly substitutable product

Oligopoly
Small number of firms Product differentiatio n. Barriers to entry

Perfectly Competitive Market


Less market power Price takers Free entry and exit Perfect Info.

INDIAN TELECOMM INDUSTRY


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The Indian telecommunications industry is the world's fastest growing telecommunications industry with 652.42 Million mobile phone connections as of July 2010. It is also the second largest telecommunication network in the world in terms of number of wireless connections after China. The Indian Mobile subscriber base has increased in size by a factor of more than one-hundred since 2001 when the number of subscribers in the country was approximately 5 million to 652.42 Million in July 2010. As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile subscribers by 2013.

The first operator is the state-owned incumbent BSNL. Under the leadership of Rajiv Gandhi, many public sector organizations were set up like the Department of Telecommunications (Dot), VSNL and MTNL. In 1994, P.N Rao led government introduced the national telecommunications policy [NTP] which brought changes in ownership, service and regulation of telecommunications infrastructure. After 5 years the country was divided into 20 Telecommunication circles for basic telephony and 18 circles for mobile services. For cellular service two service providers were allowed per circle and a 15 years license was given to each provider during bids thrown by Government of India.

BHARTI AIRTEL
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VODAFONE

RELINCE COMMUNICATIONS

 Few Firms  Example: By Market cap.

On the basis of product differentiation. Airtel: - main Concentration on youth. Vodafone: - Business people & youth. Reliance: - targeting lower class people by providing cell phone in 999 Rs.

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On the basis of entry of firms. To enter into mobile service market in India you need to get license from (DOT) there are lot of restrictions from TRAI (Telephone regulatory authority of India).

On the basis of the presence or absence of price leadership.


Absence of price leadership in mobile service providers in India.

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On the basis of deliberate agreement.


E.g. The Apple iPhone 3G was rolled out in India on 22 August 2008 by Airtel & Vodafone.

Competition among few: - There are just few sellers


under oligopoly. The number could be more than one but not very many. Following are the major players in mobile service providers in oligopolistic market in India.

Interdependence among rivals firm.

1) Airtel life time free plan. 2) Tata Docomo launched pay per second calling.

Possibility of collusion.
E.g. CARTEL SYSTEM But incase of mobile service provider in India they are not following any uniform price so this feature is not applicable.

Rigidity in pricing.
E.g. Airtel government employee card 10 paisa per minute to attract Gov employee; Also Tata docomos & others companies plans of pay per second.

Barriers to entry:License from (DOT) & Rules & regulation from TRAI.

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Excessive expenditure on ads.


IDEA Cellular- Abhishek bacchan. Airtel: - Sachin tendulkar, Ar rahman. Reliance :- Hrithik Roshan Vodafone :- use of zoozoo characters.

The kinky Demand curve developed by Paul sweezy in US (economist) & by Hall & Hitch in England. Protect and maintain their market share. Rival firms are unlikely to match anothers price increase but may match a price fall.

Dual Effect on AR Curve. AR curve change from relatively Inelastic price curve to Relatively elastic curve.

Non-price competition involves advertising and marketing strategies to increase demand and develop brand loyalty among consumers. Better Quality of service to the mobile service users. Low & Reasonable tariff charges for calls,24 X 7 online & customer care support.
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Discounts for existing customers on product upgrades & New plans ,when they become available in the market.

Mobile service providers in India are operating under oligopoly market. Product differentiation & on the basis of entry of firm& absence of price leadership are most suitable classification of India mobile service providers. In practical, There is limited evidence for the Kinked demand curve model, It helps firm to maintain stable price & output. Kinky demand curve leads to Non price competition among Mobile service providers in India.

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