How Contestable Is the Domestic Market for Mobile Phone Networks

1101 Words5 Pages
` 1. How contestable is the domestic market for mobile phone networks? Oligopolists compete in the UK mobile telephone industry in several ways. Oligopoly is competition within a few very large firms which dominate the market. Each firm has some market power, supplies branded products and entry barriers exist. Contestable markets are markets where the entry and exit costs are low. Competition is always likely in a contestable market. Taking this into consideration it would be a very hard market to enter and compete it due to the big names already dominating the market. When a new mobile phone enters the market it would be difficult for them to match up to the big names like o2. This is because people are not familiar with their company as it is not well known and people would want to purchase well known brands as opposed to something that is not known. Also large mobile phone companies offer many deals and low prices to attract more customers to their companies. They might offer a free phone, or other gadgets e.g. a tablet when they choose to go with their company. As the large companies have built themselves up to this position they can afford to give it out free items whereas a new mobile phone network would not be able to and therefore cannot compete with the larger firms. 2. Is the market for roaming Sim cards perfectly competitive? Yes the market for roaming sim cards can be seen as perfectly competitive as for the following reasons. In perfectly competitive market price-taking firms have no influence over the ruling market price. There is also free entry and exit to and from the market. Moreover, identical (homogeneous) products are supplied and each supplier seeks to maximise profits. Everyone has perfect knowledge of prices, technology and production methods. All these characteristics determine that roaming sim cards are a perfectly competitive

More about How Contestable Is the Domestic Market for Mobile Phone Networks

Open Document