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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.
FLOW OF PROJECT
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MonopolyMonopolistic Competition
OligopolyPerfectly
Competitive Market
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Perfectly Competitive Market
� Less market
power � Price takers
� Free entryand exit
� Perfect Info.
Monopolistic Competition
� Many firms
� Free entry and
exit� Differentiated
but highlysubstitutable product
Oligopoly
� Smallnumber of firms
� Productdifferentiation.
� Barriers toentry
Monopoly
� There ismarket power
� Single seller � One product
(limited or no goodsubstitutes)
� Barriers to
entry
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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 interms 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.
INDIAN TELECOMM INDUSTRY
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` The first operator is the state-owned incumbent BSNL.
` Under the leadership of Rajiv Gandhi, many public sector organizations wereset 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 15years license was given to each provider during bids thrown by Government of India.
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` BHARTI AIRTEL
`
VODA
FON
E
` RELINCE COMMUNICATIONS
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Few Firms
Example:
By Market cap.
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` 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).
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` On the basis of the presence or absence of price
leadership.` Absence of price leadership in mobile service providers in
India.
` On the basis of deliberate agreement.
` E.g. The Apple iPhone 3G was rolled out in India on 22
August 2008 by Airtel & Vodafone.
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` 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.
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` Interdependence among rivals firm.
` 1) Airtel life time free plan.
` 2) Tata Docomo launched pay per
second calling.
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` 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.
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` R igidity 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.
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` 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.
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` 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 another¶s price increase
but may match a price fall.
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` Dual Effect on AR Curve.
`
AR curve change from relatively Inelastic price curve toRelatively elastic curve.
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` 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.
` Discounts for existing customers on product upgrades &
New plans ,when they become available in the market.
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` 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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