P R E S E N T E D B Y:

ZAINAB KASHIF

ABUBAKKAR KHURRAM

FAT I M A S A G H E E R

ABDULLAH SHABAN

Oligopoly
Telecommunication Industry
Oligopoly:

A market structure with a small number of firms, none of which can keep the others with having
significant influence.
Characteristics
Few firms

Barriers to entry

 Nature of product : Homogenous or differentiated

 Interdependence

 Non price competition

Kinked demand curve
Developed by American Economist Paul Sweezy .

It illustrates the interdependent decision making by businesses in oligopoly market.

Here interdependence means the likely reaction of competitors as a result of change in price or in non
price like marketing and advertising.

The kink in a demand curve occurs when both inelastic and elastic curve intersect each other at the
level of preveiling price.
Assumptions:
Each Firm in Oligopoly believes that:
If a firm lowers the price below the prevailing level, then the
competitors will follow him.
If a firm increases the price above the prevailing level, then the
competitors will not follow him.
Elasticity due to price changes:
If jazz increases its price, consumers will shift to its other rivals
like ufone, Telenor, zong

The demand will fall as a result of which ii will loss its Revenue.

However , there is brand differentiation in some firms.

Some customers will still buy it because price is not dominant

factor for them.
GAME THEORY
>A study of rational decision making in a situation in which a number of players(firms)
compete,knowing that other players (firms) will react to their moves.

>Under oligopoly the firms strategy are their output and price,and payoffs are their profits.
•Mutual interdependence
• –Pricing policy

•Collusion
• –Enhances profit

•Incentive to cheat
NASH EQULIBRIUM
The equilibrium where each firms best strategy is to maintain its present behaviour

•If NASH eqb. is established no firm has an incentive to depart form it by altering  it own
behaviour.
◦ Strategic Behaviour
◦ Breakdown of Co-operation
GAME THEORY
2 competitors
•2 price
strategies
•Each
strategy has
a payoff
matrix
•Greatest
combined
profit
•Independen
t actions
stimulate a
response
COMPETITOR OF JAZZ