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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



MonopolyMonopolistic Competition

OligopolyPerfectly

Competitive Market



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



` 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



` 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.



` BHARTI AIRTEL

`

VODA

FON

E

` 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.



` 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.

` 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.



` 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.



` Barriers to entry:-

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



` 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 another¶s price increase

but may match a price fall.



` Dual Effect on AR Curve.

`

AR curve change from relatively Inelastic price curve toRelatively 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.

` 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.