Presentation ..ECHO ..Oligopoly

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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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    MonopolyMonopolisticCompetition

    OligopolyPerfectly

    CompetitiveMarket

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    PerfectlyCompetitiveMarket

    Less market

    power Price takers

    Free entryand exit

    Perfect Info.

    MonopolisticCompetition

    Many firms

    Free entry and

    exit Differentiated

    but highlysubstitutableproduct

    Oligopoly

    Smallnumber offirms

    Productdifferentiation.

    Barriers toentry

    Monopoly

    There ismarketpower

    Single seller One product

    (limited orno 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 TELECOMMINDUSTRY

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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 telecommunicationspolicy [NTP] which brought changes in ownership, service and regulation oftelecommunications infrastructure.

    ` After 5 years the country was divided into 20 Telecommunication circles forbasic 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 ofIndia.

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    ` BHARTIAIRTEL

    `

    VODA

    FON

    E

    ` RELINCE COMMUNICATIONS

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    Few Firms

    Example:

    By Market cap.

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    ` Onthe basisofproductdifferentiation.

    ` 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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    ` Onthe basisofentryoffirms.

    ` 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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    ` Onthe basisofthepresenceorabsenceofprice

    leadership.` Absence of price leadership in mobile service providers in

    India.

    ` Onthe basisofdeliberateagreement.

    ` E.g. The Apple iPhone 3G was rolled out in India on 22

    August 2008 by Airtel & Vodafone.

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    ` Competitionamongfew:- There are just few sellersunder 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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    ` Interdependenceamongrivalsfirm.

    ` 1)Airtel life time free plan.

    ` 2) Tata Docomo launched pay per

    second calling.

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    ` Possibilityofcollusion.

    ` 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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    ` Rigidityinpricing.

    ` E.g. Airtel government employee card 10 paisa per minute to

    attract Gov employee;

    Also Tata docomos & others companies plans of pay persecond.

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    ` Barrierstoentry:-

    ` License from (DOT) & Rules & regulation from TRAI.

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    ` Excessiveexpenditureonads.

    ` 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 anothers 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.

    ` Discountsforexistingcustomersonproductupgrades &

    Newplans ,when they become available in the market.

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    ` Mobile service providers in India are operating underoligopoly market.

    ` Product differentiation & on the basis of entry of firm&

    absence of price leadership are most suitable classification ofIndia 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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